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Economy in Brief

U.S. Durable Goods Orders Crash With Aircraft
by Tom Moeller June 24, 2010

For the second month in a row the durable goods orders numbers from the Commerce Department were heavily influenced by a swing in commercial aircraft bookings, last month to the downside. The advance reading of durable goods orders was a 1.1% decline  following a little-revised 3.0% April increase. The drop roughly matched Consensus expectations. Nondefense aircraft orders, however, accounted for the decline with a near one-third decline (+20.3% y/y) after they more-than tripled in April.

For the nondefense capital goods sector overall May orders fell 2.8% after the 8.2% April jump. Conversely, a 2.1% gain in orders less aircraft reversed nearly all of the April decline. Machinery orders gained 5.6% (20.8% y/y) and reversed April's decline while computer orders rebounded 2.5% (+13.0% y/y) after a sharp 5.9% April drop. Electrical equipment orders were roughly unchanged (+14.6% y/y). 

Shipments of durable goods exhibited improvement with a 0.4% downtick (+11.2% y/y) after near 2.0% gains during the prior two months. A 3.2% May rise (8.8% y/y) in machinery shipments was offset by a 3.2% decline in shipments of computers (+11.6% y/y). Shipments of electrical equipment nudged up 0.3% (8.5% y/y) and primary metals shipments increased 1.0% m/m (52.1% y/y).

Inventory accumulation continued behind the improvement in orders & shipments. Durable goods inventories rose 0.8% (-3.1% y/y) for the fourth consecutive strong monthly increase. Nevertheless, inventories remained 11.5% below the late-2008 peak. Finally, backlogs of durable goods orders inched up 0.2% last month but remained down 3.2% y/y.

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

The press release following yesterday's FOMC meeting can be found here.

 

NAICS Classification (%) May April March Y/Y 2009 2008 2007
Durable Goods Orders -1.1 3.0 0.1 14.9 -20.7 -9.0 9.7
Excluding Transportation 0.9 -0.8 4.9 17.6 -18.4 -2.5 4.5
Nondefense Capital Goods -2.8 8.2 -2.8 18.5 -26.8 -12.6 17.5
Excluding Aircraft 2.1 -2.7 6.7 17.3 -19.8 -4.2 5.3
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