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Economy in Brief

U.S. Durable Goods Orders Off Sharply
by Tom Moeller April 27, 2005

Orders received by U.S. manufacturers of durable goods dropped 2.8% last month following a revised 0.2% dip in February. It was the third consecutive monthly decline in new orders. Consensus expectations had been for a 0.3% rise.

Lower orders for transportation equipment, down 7.8% (-15.3% y/y), reflected steep declines in orders for both civilian (-22.7% m/m, -15.3% y/y) and defense (-35.0% m/m, -23.0% y/y) aircraft. The third consecutive decline motor vehicle & parts orders (-11.0% y/y) also contributed. Less transportation durable orders fell 1.0% (+3.9% y/y).

Orders for non-defense capital goods fell 6.2%. Less aircraft, the 4.7% decline reflected a 3.4% (+0.6% y/y) drop in orders for electrical equipment and a 7.6% drop in orders for machinery (+0.5% y/y). Computer & electronic product orders rose 2.2% (7.9% y/y).

Shipments of durables slipped 0.2% (+3.5% y/y) while durable inventories rose 0.4% (9.6% y/y). That rise caused the I/S ratio to increase to its highest level since late 2003.

Unfilled orders fell 0.5% (+6.6% y/y) and the ratio of backlogs to shipments gave back some of prior month's sharp increase.

NAICS Classification Mar Feb Y/Y 2004 2003 2002
Durable Goods Orders -2.8% -0.2% -1.7% 10.8% 2.6% -1.7%
Nondefense Capital Goods -6.2% -0.7% 1.1% 13.7% 5.6% -7.2%
Excluding Aircraft -4.7% -2.5% 1.6% 11.7% 6.6% -7.1%
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