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Economy in Brief

U.S. Durable Goods Orders Collapse Due To Aircraft & Autos
by Tom Moeller  May 25, 2011

The transportation sector caused huge volatility in durable manufacturing last month. New orders for durable goods fell 3.6% and reversed virtually all of the 4.4% March gain. Past figures were revised as part of the benchmark changes released earlier this month. The latest decline outpaced Consensus expectations for a 2.2% drop. Leading the fall were lower orders in the transportation sector where bookings for aircraft & parts fell 23.6% (-24.5% y/y). In addition, disruption due to the earthquake in Japan helped orders for motor vehicles & parts fall 4.5% (+13.4% y/y) after a 6.6% March increase.

Outside of the transportation sector, orders also declined last month by 1.5% and reversed most of the March increase. Electrical machinery orders dropped 4.9% (+4.0% y/y) and machinery orders fell 3.4% (+16.1% y/y). Orders for computers also have lost great momentum recently but still ticked up 0.7% (-2.3% y/y) in April. In the capital goods sector, volatile orders for commercial aircraft often create huge swings in the total, but recently the overall trend still has weakened considerably. While the level of orders remains high, total nondefense capital goods orders fell 7.3% last month and the y/y gain fell to 4.6%. Excluding aircraft, orders fell 2.6% and the y/y gain weakened to 11.1%.

Shipments of durable goods also declined last month by 1.0% but y/y growth remained firm at 6.7%. The 12-month gain compares to a diminished 8.0% y/y increase in industrial production of durable goods. Shipments of motor vehicles and parts fell 4.3% (+13.4% y/y). Less transportation, shipments slipped 0.4% (+7.1% y/y) after a 2.5% March increase.

As the level of orders remained higher than shipments, unfilled orders continued to rise but by a lessened 0.2% (5.2% y/y). Less the transportation sector, backlogs were up a stronger 12.4% versus last year. The rate of inventory accumulation also decelerated last month to a still-strong 0.9% (12.6% y/y), it was the weakest m/m rise this year.

The durable goods figures are available in Haver's USECON database. The expectation figure is in the AS1REPNA database.

Durable Goods NAICS Classification (%) Apr Mar Feb Y/Y 2010 2009 2008
Orders -3.6 4.4 -1.1 5.3 15.4 -27.3 -6.3
  Excluding Transportation -1.5 2.5 -0.6 6.7 14.1 -23.2 -1.5
Nondefense Capital Goods -7.3 5.0 4.8 4.6 28.0 -31.0 -8.4
  Excluding Aircraft -2.6 5.4 -0.1 11.1 17.2 -20.4 -1.2
Shipments -1.0 3.1 0.0 6.7 6.2 -20.4 -2.8
  Excluding Transportation -0.4 2.5 -0.2 7.1 8.7 -21.0 -0.1
Inventories 0.9 1.7 1.2 12.6 9.9 -9.0 -0.2
  Excluding Transportation 0.9 1.4 1.1 11.0 7.6 -12.8 -0.7
Unfilled Orders 0.2 0.7 0.5 5.2 3.9 -15.2 4.3
  Excluding Transportation 0.4 0.6 0.8 12.4 11.6 -12.5 -2.1
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