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Economy in Brief

Rate of U.S. GDP Decline Slows in Q2 2009
by Tom Moeller December 24, 2009

Despite only a modest rise in November durable goods orders, the trend has improved sharply. Durable goods orders rose 0.2% last month after an unrevised 0.6% October decline. The latest increase lifted orders 5.4% above the March low and the y/y decline of 7.8% compares with a peak 26.6% decline last winter. A 0.5% November gain had been the Consensus expectation.

A 5.5% (-10.9% y/y) decline in transportation equipment orders in fact masked the degree of improvement in overall orders. Transportation orders were pulled down by a 32.6% (-3.7% y/y) decline in civilian aircraft. Excluding transportation altogether, orders rose 2.0% during November and have risen 7.3% from their April low.

Primary metals orders also continued their recovery with a 1.4% November increase (-7.3% y/y) and they have risen one-quarter from the March low. Electrical equipment orders rose about as they did during October. The 3.2% gain lifted orders 10.0% from the spring low. Orders for computers & related equipment also improved for the second month by 1.6% during November. The increase lifted them 14.9% above April's low. Finally, machinery orders increased 3.5% (-14.0% y/y), made up half of the October decline and raised them 9.8% from the low.

The decline in aircraft bookings also masked improvement in other capital goods orders. Nondefense capital goods orders less aircraft more than recovered the October slump with a 2.9% increase and they now are 9.8% above the April low.

Shipments of durable goods ticked up 0.3% (-8.8% y/y) during November following increases in two of the prior three months. Shipments now have risen 4.4% from the April low. The improvement has been paced by strong monthly gains in shipments of metals (-16.6% y/y), up 24.2% from the low. Machinery orders rose 2.0% (-20.3% y/y) after touching the cycle low in October. Electrical equipment orders rose 2.2% (-9.1% y/y), about as they did in October.

As was suggested by the October data, the shedding of inventories of durable manufactured goods seems to be ending after nearly a year of correction. Durable goods inventories slipped 0.2% (-11.3% y/y) after no change during October. Declines in inventories lowered the ratio to shipments to its lowest since October of last year.. Unfilled orders fell another 0.7% (-10.9% y/y) led by declines in the transportation sector. Less transportation backlogs rose 0.1% (-11.4% y/y) for the second gain in three months.

The durable goods figures are available in Haver's USECON database.

NAICS Classification (%) November October September Y/Y 2008 2007 2006
Durable Goods Orders 0.2 -0.6 2.2 -7.8 -5.8 1.4 6.2
    Excluding Transportation 2.0 -0.7 2.1 -6.9 -1.2 -0.3 9.1
Nondefense Capital Goods -1.9 0.8 3.4 -11.1 -6.8 3.5 9.4
 Excluding Aircraft 2.9 -2.0 2.9 -10.2 -0.3 -2.7 10.7
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