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Economy in Brief

U.S. Durable Goods Orders Decline With Transportation Bookings
by Tom Moeller  July 27, 2011

New orders for durable goods fell 2.1% last month following an unrevised 1.9% May rise. A 0.4% increase had been the Consensus expectation. Transportation sector orders led the fall and slumped 8.5% (+9.5% y/y). Bookings for aircraft & parts fell 26.0% (+11.4% y/y) and reversed the prior month's jump. Nondefense aircraft orders fell 28.9% (+41.1% y/y) while defense fell 20.5% (-17.6% y/y). Lower orders for motor vehicles & parts added to the decline with a 1.4% drop (+6.8% y/y).

Outside of the transportation sector, orders improved a slight 0.1% after the 0.7% May gain. However, trend growth is slowing. Electrical machinery orders rose 0.4% (2.1% y/y) after a 15.9% gain last year but machinery orders fell 2.3% (+4.0% y/y) following last year's 22.8% recovery. Orders for computers fell 0.8% (+5.3% y/y) and the y/y gain compares to 30.0% growth last summer. In the nondefense capital goods sector, the 4.1% orders' decline owed to the drop in aircraft, but nondefense orders less aircraft still slipped 0.4%. The 5.6% y/y gain compares to 20.8% growth at its peak in the Spring of 2010.

Shipments of durable goods rose 0.5% and repeated its modest May rise. The 7.6% y/y growth just exceeded growth during 2010 and roughly equaled the gain in production of durable goods. Shipments of motor vehicles and parts rose a lessened 6.2% y/y. Less transportation altogether orders grew 9.0% y/y, about the same as during all of last year.

As the level of orders remained higher than shipments, unfilled orders continued to rise. Growth slowed last month to 0.2% yet that still left them 6.5% higher than last year. Less transportation the y/y gain was a stronger 13.3% due to a one-third surge in machinery and a nearly one-quarter jump in electrical equipment. The rate of inventory accumulation slowed considerably last month to 0.4% (12.1% y/y).

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

Durable Goods NAICS Classification (%) Jun May Apr Y/Y 2010 2009 2008
Orders -2.1 1.9 -2.5 7.6 15.4 -27.3 -6.3
  Excluding Transportation 0.1 0.7 -0.1 7.1 14.1 -23.2 -1.5
Nondefense Capital Goods -4.1 5.2 -5.3 7.2 28.0 -31.0 -8.4
  Excluding Aircraft -0.4 1.7 -0.4 5.6 17.2 -20.4 -1.2
Shipments 0.5 0.5 -1.4 7.6 6.2 -20.4 -2.8
  Excluding Transportation 0.7 0.8 -0.7 9.0 8.7 -21.0 -0.1
Inventories 0.4 1.2 1.2 12.1 9.9 -9.0 -0.2
  Excluding Transportation 0.1 0.9 1.4 9.9 7.6 -12.8 -0.7
Unfilled Orders 0.2 0.9 0.6 6.5 3.9 -15.2 4.3
  Excluding Transportation 0.7 1.1 1.2 13.3 11.6 -12.5 -2.1
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