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Economy in Brief

Surge In Aircraft Lifts U.S. Durable Goods Orders
by Tom Moeller August 25, 2004

A 37.2% m/m surge in orders for aircraft raised durable goods orders in July by 1.7% versus Consensus expectations for a 1.0% rise. Less aircraft durable orders fell 0.5% (+8.3% y/y), the third m/m decline in the last four.

The rise in new aircraft orders was powered by a doubling of orders for commercial aircraft that offset a one-third drop in defense aircraft bookings.

Higher aircraft orders raised the nondefense capital goods total by 9.0%, but less aircraft capital goods orders rose just 0.6% (11.0% y/y).

Orders for computers & electronic products fell 3.8% (+2.0% y/y), the third m/m decline in the last four. Computer orders fell 6.7% (-0.6% y/y) though a 5.0% rise in electrical equipment, appliance & component orders recouped half of the prior two months' decline. Machinery orders added 2.1% (18.0% y/y) to a 1.1% rise in June.

During the last ten years there has been a 58% correlation between the y/y change in durable goods orders and the orders component of the Philadelphia Federal Reserve's Business Outlook Survey. That correlation rose to 72% during the last five years.

Shipments of durable goods rose 0.1% (8.3% y/y) after a 1.1% June gain. Shipments excluding the transportation sector rose 1.7% (+12.6% y/y) after a 1.2% spurt in June.

Durable inventories rose 0.8% (3.4% y/y) for the third straight month.

New research from the Federal Reserve Bank of New York titled "The Relationship between Manufacturing Production and Goods Output" is available here.

NAICS Classification July June Y/Y 2003 2002 2001
Durable Goods Orders 1.7% 1.1% 11.7% 2.6% -1.7% -10.5%
  Non-defense Capital Goods 9.0% 1.1% 19.4% 5.6% -7.2% -15.5%
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