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Economy in Brief

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

A 41.6% m/m decline in nondefense aircraft orders combined with a 3.5% drop in defense aircraft bookings to pull total orders for durable goods down 2.1% last month. The 3.8% rise in August orders was upwardly revised and Consensus expectations had been for a 1.2% September decline.

Less the transportation sector altogether, durable goods orders slipped 1.0% after an upwardly revised 5.1% September jump, however, the year to year gain in orders less transportation is the same 6.0% as the gain in the total.

Total nondefense capital goods orders dropped 8.1% m/m due to the drop in aircraft but less aircraft these orders slipped a modest 1.2% following an upwardly revised 4.0% August surge.

Machinery orders increased 1.0% (7.6% y/y) on top of a 4.0% August gain and though electrical equipment orders fell 3.5% (8.4% y/y). Orders for computers & electronic products, down 3.6% (+0.9% y/y), fell hard for the second month in the last three. Computer orders fell 6.8% (+5.8% y/y).

Shipments of durable goods edged up 0.1% (5.3% y/y) in September and less transportation shipments rose 0.4% (6.3% y/y).

Order backlogs rose another 0.7% (10.4% y/y) and excluding transportation backlogs jumped 1.1% (8.9% y/y). The ratio of backlogs to shipments excluding transportation rose to the highest since early 2004.

Durable inventories fell 0.1% (+5.1% y/y) following a 0.2% August decline. The momentum behind durable inventory accumulation has waned sharply to the point where the y/y gain is now half what it was earlier this year. As a result the I/S ratio for durable goods has fallen for most of this year.

NAICS Classification Sept Aug Y/Y 2004 2003 2002
Durable Goods Orders -2.1% 3.8% 6.0% 9.5% 4.1% -3.4%
    Excluding Transportation -1.0% 5.1% 6.0% 11.7% 3.1% -6.2%
Nondefense Capital Goods -8.1% 4.1% 8.5% 11.0% 4.2% -9.8%
 Excluding Aircraft -1.2% 4.0% 5.4% 9.5% 4.8% -10.5%
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