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Economy in Brief

U.S. Durable Goods Orders Soar With Aircraft
by Tom Moeller May 26, 2010

No category of factory orders can influence the Commerce Dept's monthly figures more than commercial aircraft. This has never been more evident than in recent months. During April, overall durable goods orders jumped 2.9%, while excluding the transportation sector altogether, orders fell 1.0%. That follows a roughly unchanged level of new durable orders during March and a 4.8% gain less transportation. Nevertheless, the trend improvement in the new orders total has been notable and part of the overall picture of factory sector improvement. A 1.5% gain in April durable goods orders was the Consensus expectation.

An 81.2% rise (91.5% y/y) in orders for aircraft & parts was behind the gain in transportation sector orders. Economic recovery and an aging fleet of planes caused orders for nondefense aircraft to more-than-triple m/m and they've also tripled during the last year. For the capital goods sector overall, April orders jumped 9.2% but less aircraft they fell 2.4%. Month-to-month volatility also was notable for primary metals orders which fell 2.0%. (They've risen 55.0% during the last year.) Machinery orders also fell a sharp 5.9% last month but they're up 24.2% y/y due to strength in four of the last five months. April orders for electrical equipment were weak and fell 6.9% (+13.4% y/y) while computer orders fell 3.0% but they're up by nearly one-half y/y.

Shipments of durable goods followed the gains in orders and posted a 1.4% increase (8.8% y/y) after a 2.1% March rise. Shipments of computers led the gain with an 8.0% increase (27.8% y/y) along with a 1.9% increase (5.5% y/y) in shipments of electrical equipment. Machinery shipments fell 3.0% (+5.1% y/y) and primary metals shipments slipped 0.2% m/m (+46.1% y/y).

Accumulation of inventories is bolstering the increase in orders & shipments. Durable goods inventories rose 0.7% (-5.4% y/y) for the third month of firm increase. Nevertheless, inventories remained well below past levels. Since December 2009 inventories have risen 2.1% but levels remain lean after last year's 12.8% decline. Finally, backlogs of durable goods orders gained 0.4% last month but remained down 3.8% y/y.

The durable goods figures are available in Haver's USECON database. The latest durable goods data reflected earlier benchmark revisions.

NAICS Classification (%) April March February Y/Y 2009 2008 2007
Durable Goods Orders 2.9 -0.0 0.5 18.9 -20.7 -9.0 9.7
    Excluding Transportation -1.0 4.8 2.1 18.0 -18.4 -2.5 4.5
Nondefense Capital Goods 9.2 -6.8 9.0 36.8 -26.8 -12.6 17.5
 Excluding Aircraft -2.4 6.5 3.0 21.4 -19.8 -4.2 5.3
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