Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. The first release, the advance, provides an early estimate of durable goods orders. About two weeks later, more complete and revised data are available in the factory orders report. The data for the previous month are usually revised a second time upon the release of the new month's data. (Bureau of the Census, U.S. Department of Commerce) Why Investors Care
| Released on 3/26/08 For Feb 2008 | ||||||||||||
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Highlights
Durable goods orders in February dashed market hopes for a rebound by dropping sharply for the second month in a row. Durable goods orders fell 1.7 percent in February, following a 4.7 drop in January. The February decrease was far worse than the market projection for a 0.7 percent rebound in new durables orders. Excluding the transportation component, new orders worsened 2.6 percent in February, following a 1.0 percent decline in January. The latest durables numbers point to a declining manufacturing sector - more evidence that the economy has entered a recession.
Weakness in February was led by a sharp drop in machinery with fabricated metals and "other" also declining. On the plus side, transportation did rebound due to aircraft orders but not as much as expected. The motor vehicle subcomponent in transportation declined for the latest month. Other gainers were primary metals, computers & electronics, and communications equipment.
Raising concerns about business investment was a 1.0 percent decline in nondefense capital goods orders which followed an 8.4 percent fall in January. This component is a leading indicator for the producers' durable equipment component within GDP.
Year-on-year, new orders for durable goods slipped to up 2.2 percent in February from up 4.5 percent in January. Year-on-year unfilled orders were unchanged at up 18.4 percent in February.
Today's report adds to the growing list of indicators suggesting that manufacturing is in a downturn. Treasury rates dipped on the near end on the news and equities are likely to react negatively, barring any offsetting company news.
Durable goods orders now have been pointing to a decline in the manufacturing sector and possibly the economy overall. Durable goods orders retreated 5.3 percent in January, following a 4.4 percent surge in December. Excluding the transportation component, new orders still came in weak, falling 1.6 percent in January, following a 2.0 percent boost in December. While a large portion of January's weakness was in aircraft orders, declines were fairly widespread. There still is some forward momentum in orders backlogs but if new orders do not pick up, then manufacturing will help pull the overall economy into recession.
New orders for durable goods Consensus Forecast for February 08: +0.7 percent
Range: -0.5 percent to +3.0 percent
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Monthly fluctuations in durable goods orders are frequent and large and skew the underlying trend in the data. In fact, even the yearly change must be viewed carefully because of the volatility in this series. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
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