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Economy in Brief

U.S. Durable Goods Orders Recover
by Tom Moeller January 26, 2006

Orders for durable goods in December rose 1.3% following an upwardly revised 5.4% increase in November. The rise about matched Consensus expectations for a 1.0% gain, however, the details of the report painted a more constructive picture of factory sector activity than was portrayed in the November release.

Aircraft & parts orders which rose 77% and 69% in October & November, respectively, and dominated those two months' reports fell just 2.9% and were triple the year earlier level in December.

Moving in the other direction, new orders for motor vehicles & parts rose 6.6% (-1.3% y/y) following two months of sharp decline.

Less the transportation sector altogether, durable goods orders rose 0.9% following an upwardly revised 0.6% November increase.

Machinery orders rose 6.5% (10.9% y/y) after a 3.1% November increase, initially reported as a decline. Fabricated metals orders rose 1.3% (3.2% y/y) following a 1.6% November decline that was shallower than initially reported and orders for computers & related products rose 1.5% (8.0% y/y) after an upwardly revised 8.1% November increase.

Orders for nondefense capital goods fell 0.6% due to the drop in aircraft but less aircraft, nondefense capital goods orders increased 3.5% after a slight November increase that initially was reported as a 2.0% drop.

On the downside in December were communications equipment orders which fell 3.3% (-7.4% y/y) and electrical equipment orders which fell 2.8% (+14.8% y/y).

Shipments of durable goods jumped 3.5% (6.7% y/y) in December following a 0.6% November increase. Less the transportation sector, shipments rose 2.3% (6.0% y/y) after an upwardly revised 0.5% November increase.

Order backlogs surged another 2.4% (16.3% y/y) due to the high level of aircraft orders. Less transportation backlogs ticked up 0.3% (10.0% y/y) and the ratio of backlogs to shipments outside of transportation fell from the November high.

Durable inventories ticked 0.1% higher (3.5% y/y) after an upwardly revised 0.8% November increase.

NAICS Classification Dec Nov Y/Y 2005 2004 2003
Durable Goods Orders 1.3% 5.4% 12.7% 8.5% 9.5% 4.1%
    Excluding Transportation 0.9% 0.6% 5.8% 8.5% 11.7% 3.1%
Nondefense Capital Goods -0.6% 22.2% 31.3% 19.7% 11.0% 4.2%
 Excluding Aircraft 3.5% 0.2% 7.0% 10.6% 9.5% 4.8%
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