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Economy in Brief

U.S. Durable Goods Orders Down: Aircraft Orders Quite Volatile
by Tom Moeller September 24, 2004

Volatile orders for aircraft & parts dominated the durable goods figures again in August as a 35.1% m/m decline followed a 37.3% July surge. This pulled total durable goods orders down 0.5% last month following a 1.8% jump in July that was little revised. Consensus expectations had been for no change in total August orders. Less aircraft durable orders were quite strong, up 2.5% (11.3% y/y) following a 0.4% decline in July.

Commercial aircraft orders retraced nearly all of the doubling of bookings in July.

The volatility in aircraft orders pulled total nondefense capital goods orders down 7.4%. Less aircraft, capital goods orders still fell 0.5% (11.2% y/y), the fourth monthly decline in the last five.

Orders for computers & electronic products recouped most of a 4.3% decline in July with a 4.1% (+4.3% y/y) August rise. Computer orders only gained back 0.8% (0.3% y/y) of the 5.2% July plunge but orders for communications equipment added 6.8% (1.3% y/y) to the 5.3% July strength. Orders for electrical equipment, appliance & components rose 1.8% (9.2% y/y) after a 6.7% spike in July. Machinery orders were unchanged (17.5% y/y) following moderate gains in the prior three months.

"The Software Patent Experiment" from the Federal Reserve Bank of Philadelphia can be found here.

During the last ten years there has been an 80% correlation between the y/y change in real nonresidential fixed investment in equipment & software and the change in orders for nondefense capital goods. The correlation with shipments has been 93%.

Shipments of durable goods jumped 1.7% (13.4% y/y) following a 0.4% July rise. Shipments excluding the transportation sector, which were pumped by the motor vehicle and the aircraft sectors, rose 0.7% (+14.9% y/y).

Durable inventories rose 0.6% (5.1% y/y) following an upwardly revised 1.1% July spike.

NAICS Classification Aug July Y/Y 2003 2002 2001
Durable Goods Orders -0.5% 1.8% 11.7% 2.6% -1.7% -10.5%
  Non-defense Capital Goods -7.4% 9.3% 13.0% 5.6% -7.2% -15.5%
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