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Economy in Brief

U.S. Durable Goods Orders Up But Below Projections
by Tom Moeller July 28, 2004

Durable goods orders in June rose 0.7%. The rise was half the Consensus projection for a 1.5% gain. Part of the shortfall was made up for by an upward revision of the May figure to a 0.9% decline versus -1.6% reported initially.

An upward revision to transportation sector orders accounted for about all of the May revision. Transportation orders rose another 4.2% in June following two months of decline. Orders for defense aircraft surged 79.1% in June after a 23.8% jump in May.

Excluding the transportation sector altogether durable goods orders fell 0.6% (+13.5% y/y), down for the third straight month.

Weakness in orders has been widespread recently. Computers & electronic products orders fell 1.0% (+9.7% y/y) in June for the second decline in three months. Communications equipment orders have been notably weak. Electrical equipment, appliance & component orders dropped 4.4% (+1.8% y/y) following a like decline in May. Primary metals orders fell for the second month in three (+28.7% y/y). Machinery orders have been about flat for two months (18.4% y/y) after a 4.1% April skid.

During the last ten years there has been a 74% correlation between the y/y change in orders for non-defense capital goods less aircraft and the change in industrial production of capital goods.

Nondefense capital goods orders less aircraft managed a 1.2% rise (10.8% y/y) following two months of decline.

Shipments of durable goods rose 0.7% (10.7% y/y) following two months of moderate decline. Shipments excluding the transportation sector rose 0.7% (+12.6% y/y).

Durable inventories rose 0.7% (1.9% y/y), the same as the upwardly revised May.

NAICS Classification June May Y/Y 2003 2002 2001
Durable Goods Orders 0.7% -0.9% 11.3% 2.6% -1.7% -10.5%
  Non-defense Capital Goods 1.1% -1.4% 11.1% 5.6% -7.2% -15.5%
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