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 5/28/08 For Apr 2008 | ||||||||||||
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Highlights
Durable goods orders in April fell but not as much as expected and also showed some surprising signs of strength after discounting a decline in transportation. Durable goods orders slipped another 0.5 percent in April, following a 0.3 percent decline in March. April's figure came in not as bad as market expectations for a 1.1 percent decrease. However, excluding the transportation component, new orders advanced a strong 2.5 percent in April, following a 1.7 percent gain the prior month. The rebound was primarily in electrical equipment but other industries also showed gains.
Weakness in overall new orders in April was led by an 8.0 percent fall in transportation, which included a monthly 24.4 percent drop in nondefense aircraft. Motor vehicles and defense aircraft also declined, by 3.3 percent and 4.9 percent, respectively. Also, losing ground for the month were fabricated metals and computers & electronics.
The large 2.5 percent surge in new orders excluding transportation was led by a monthly 27.8 percent rebound in electrical equipment after an 18.9 percent fall the prior month. Also posting gains were primary metals, machinery, communications equipment, and "other."
Nondefense capital goods orders are looking sluggish with a 1.4 percent decline, after a 1.4 percent gain in March. This component is a leading indicator for the producers' durable equipment component within GDP.
Year-on-year, new orders for durable goods fell to down 3.4 percent in April from down 0.9 percent in March.
The April durables report is actually quite encouraging despite the overall dip. Many industries showed gains for the month. The bottom line is that manufacturing may be more flat than in recession but if in recession it appears mild. Equities should like the numbers while bond yields will probably firm.
Durable goods orders in March slipped 0.3 percent but the February decline of 0.9 percent has now been revised upward to a gain of 1.1 percent with the benchmark revisions released on May 16. Excluding the volatile transportation component, durables rebounded 0.9 percent, following a 1.2 percent drop in February. Despite moderate upward revisions to annual data for 2005-2007, new orders are showing some softening on the margin. Year-on-year, new orders are now down 0.9 percent. There is still some forward momentum with unfilled orders which are up 16.9 percent on a year-ago basis.
New orders for durable goods Consensus Forecast for April 08: -1.1 percent
Range: -4.0 percent to +1.0 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. |
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