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 6/25/08 For May 2008 | ||||||||||||
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Highlights
Durable goods orders in May came in largely as expected but despite market relief, indicate at best a flat manufacturing sector. Durable goods orders were unchanged in May, following a 1.0 percent drop in April. May's overall number matched market forecasts for no change. However, excluding the transportation component, new orders fell back 0.9 percent, following a 1.9 percent surge in April. April was revised down somewhat for both overall orders and ex-transportation. For the latest month, strength was in civilian and defense aircraft orders.
Strength in overall orders was led by transportation with a 2.6 percent partial rebound, after an 8.3 percent fall the month before. For the latest month, defense aircraft rose 14.9 percent, nondefense aircraft increased 10.3 percent, and motor vehicles slipped 3.3 percent. Gains were also seen in fabricated metals, computers & electronics, and electrical equipment.
Weakness for the latest month was in machinery, down 5.3 percent; primary metals, down 1.3 percent; and "other," down 0.4 percent.
Nondefense capital goods orders are still soft despite a May comeback. These orders rose 0.4 percent in May but followed a 2.4 percent drop the month before. Businesses appear to be moderating their investment plans and these numbers point to a softening for the producers' durable equipment component within GDP.
Year-on-year, new orders for durable goods edged up to down 1.5 percent in May from down 3.8 percent in April.
Both the bond market and pre-open equities liked the numbers - apparently coming from slightly different perspectives. Bonds see the economy as a little softer and equities apparently were relieved that the numbers were not worse. But the bottom line is that the orders data are starting move closer to manufacturing surveys which indicate a flat to slightly negative manufacturing sector.
Durable goods orders have been unexpectedly strong except in transportation as April orders slipped 0.6 percent in April, following a 0.2 percent decline in March. However, excluding the transportation component, new orders advanced a strong 2.4 percent in April, following a 1.8 percent gain the prior month. The rebound was primarily in electrical equipment but other industries also showed gains. Weakness was led by a 7.9 percent fall in transportation, which included a sharp drop in nondefense aircraft. Motor vehicles and defense aircraft also declined. Levels for overall durables are still soft after notable declines in the first quarter.
New orders for durable goods Consensus Forecast for May 08: 0.0 percent
Range: -2.2 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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
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