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Economy in Brief

U.S. Durable Goods Orders Rebounded
by Tom Moeller September 27, 2005

US durable goods orders in August recouped much of the prior month's decline with a 3.3% rise that far exceeded Consensus expectations for a 0.8% increase.

The volatility of orders in the transportation sector recently has been extreme. In August, a 10.4% rise in aircraft orders followed an 18.8% July decline. Less transportation altogether, durable goods orders rose 4.2% last month to a record high.

Strength in nondefense capital goods orders also has been somewhat masked by the volatility in the transportation sector. Overall nondefense capital goods orders last month recovered most of the prior month's decline with a 4.3% increase but less aircraft these orders rose 3.6% to the highest level since 2000.

Electrical equipment orders rose a notable 8.1% (10.6% y/y) last month while machinery orders increased 3.5% (8.2% y/y). Computer & electronic products orders increased 5.5% (14.7% y/y) goosed by a 10.7% (26.4% y/y) gain in computers.

Orders for fabricated metals products rose 4.6% (3.1% y/y) to a record high while primary metal orders surged 9.2% (2.5% y/y), also a record.

Shipments of durable goods rose 1.7% (4.3% y/y) in August but less transportation shipments rose a stronger 1.2% (5.4% y/y).

Order backlogs surged 1.7%(10.3% y/y). Backlogs excluding transportation also were firm and rose 1.9% (9.1% y/y) due to broad based strength. The ratio of backlogs to shipments excluding transportation rose to the highest since last year.

Durable inventories fell 0.2% (+5.6% y/y) following an upwardly revised 0.8% rise in July.

Chairman Greenspan's comments to the National Association for Business Economists titled Economic Flexibility can be found here.

NAICS Classification Aug July Y/Y 2004 2003 2002
Durable Goods Orders 3.3% -5.3% 7.9% 9.5% 4.1% -3.4%
    Excluding Transportation 4.2% -3.7% 7.5% 11.7% 3.1% -6.2%
Nondefense Capital Goods 4.3% -7.1% 21.2% 11.0% 4.2% -9.8%
 Excluding Aircraft 3.6% -3.3% 12.4% 9.5% 4.8% -10.5%
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