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Economy in Brief

U.S. Durable Goods Orders Down Big for Second Month
by Tom Moeller October 25, 2007

Durables goods orders fell sharply in September by 1.7% following a 5.3% drop during in August. That was revised slightly deeper from the initial report. Much of series' volatility is due to orders in the transportation sector. Excluding transportation (which still can be volatile), orders rose a slight 0.3% after an unrevised 1.8% decline during August.

The very short term trend in the non-transportation series shows some improvement, but that is due to a 3.3% jump back in July for which the latest two months' results can be viewed as a payback. But before that jump the longer term trend in orders growth was down, as was the trend in overall orders for durable goods.

Weakness in orders for electrical equipment, appliances and components most assuredly reflects weakness in the consumer sector. That also is true of computers where the latest three month growth recovered to a bare 1.6%, up from negative growth in the prior two periods and down from the peak in orders growth of 15.3% early his year.

To a limited degree, orders for nondefense capital goods less the very volatile aircraft component are holding up. These orders rose 0.4% last month after a 0.1% August decline. Three month growth of 0.4% is up from negative growth just recently and is a big recovery from the excessive declines between 1% and 2% early this year.

Machinery orders led that relative strength and rose 4.3% last month and the three month average growth is 5.5%. Orders for primary metals rose 1.6% and the average rise over the last three months also is an average 1.6%, up from negative growth earlier

Growth in shipments, however have weakened even more. Overall shipments growth is down to -0.0% on average over the last three months and less transportation it's +0.1%. That's versus growth rates over 1% earlier this year.

Inventories are lean. Average growth over the last three months totals only 0.1% versus average growth rates in excess of 1% late last year.

Unfilled orders also have picked somewhat to a recent average growth rate of 0.9% but that' down from 14.1% during all of 2006.

NAICS Classification September August Y/Y 2006 2005 2004
Durable Goods Orders -1.7% -5.3% -6.6% 6.3% 9.9% 5.3%
    Excluding Transportation 0.3% -1.8% 0.1% 7.6% 8.8% 7.9%
Nondefense Capital Goods 4.4% -10.2% -11.4% 10.6% 17.1% 5.7%
 Excluding Aircraft 0.4% -0.1% .2% 8.5% 11.1% 3.2%
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