Global| Jul 25 2008U.S. Durable Goods Orders Rose. Less Transportation Orders Jumped
by:Tom Moeller
|in:Economy in Brief
Summary
Orders for durable goods rose 0.8% last month and the increase followed a 0.1% uptick during May. Consensus expectations had been for a 0.4% decline during June. The figures of late, however, have been very much influenced by weakness [...]
Orders for durable goods rose 0.8% last month and the increase followed a 0.1% uptick during May. Consensus expectations had been for a 0.4% decline during June. The figures of late, however, have been very much influenced by weakness in the transportation sector. Less transportation orders popped 2.0% during June and they have risen 6.2% during the past twelve months.
Lower orders for aircraft & parts dragged the June orders total down with a 20.3% decline (-30.4% y/y). That drop reflected an 8.6% shortfall (+53.6 y/y) in defense orders as well as a 25.1% drop (-45.2% y/y) in nondefense orders.
Orders for nondefense capital goods fell 3.2% last month but this decline also reflected weakness in aircraft orders. Less aircraft, nondefense capital goods orders rose 1.4% during June and these orders have risen 1.6% since yearend. The y/y gain of 5.5% compares to a 2.7% decline during all of last year. During the last ten years there has been an 80% correlation between the y/y gain in nondefense capital goods orders and the rise in equipment & software spending in the GDP accounts. The correlation with capital goods shipments is, as one would expect, a larger 92%.
To the upside during June were primary metal orders. They surged 5.1% and are up 10.7% this year, 22.7% y/y. Orders for machinery recovered most of the prior month's decline with a 2.3% (11.8% y/y) rise during June. Year-to-date machinery orders are, however, only near last year's rate of gain with a 1.6% rise after last year's 0.6% uptick.Orders for computers & related products slipped 0.5% but they are up 1.1% so far this year. New orders for communications equipment reversed all of the prior month's rise with a 4.4% decline and they are down 4.7% so far this year.
Overall shipments of durable goods rose 0.5% and made up about half of the May decline. Less transportation shipments recovered all of the May decline with a 0.2% (2.6% y/y) uptick.
Inventories of durable goods rose 0.5% during June, about as they did during the prior two months. Year-to-date inventories increased 3.6%, about the same as they did last year. Less transportation inventories are up 2.5%, about as they were last year.
| NAICS Classification | June | May | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Durable Goods Orders | 0.8% | 0.1% | -1.1% | 1.4% | 6.2% | 10.2% |
| Excluding Transportation | 2.0% | -0.5% | 6.2% | -0.3% | 9.1% | 9.1% |
| Nondefense Capital Goods | -3.2% | 0.2% | -5.7% | 3.5% | 9.4% | 17.3% |
| Excluding Aircraft | 1.4% | -0.1% | 5.5% | -2.7% | 10.7% | 11.6% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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