Global| May 24 2006New Orders for U.S. Durable Goods Fell
by:Tom Moeller
|in:Economy in Brief
Summary
New orders for durable goods fell 4.8% last month, giving back much of the upwardly revised 6.6% March increase. Nevertheless, durable orders in April remained up 11.3% versus last year and for the first four months of this year [...]
New orders for durable goods fell 4.8% last month, giving back much of the upwardly revised 6.6% March increase. Nevertheless, durable orders in April remained up 11.3% versus last year and for the first four months of this year orders also were 11.2% ahead of 2005. Consensus expectations had been for a 0.5% April decline.
During the last ten years there has been a 69% correlation between the y/y change in durable goods orders and the change in output of durable goods.
A 32.2% (+99.5% y/y) drop in orders for nondefense aircraft & parts led last month's decline in total orders. In addition, new orders for motor vehicles & parts dropped 1.6% (+2.1% y/y).
Less the transportation sector altogether, durable goods orders fell 1.1% and gave back a piece of the upwardly revised March gain.
Orders for computers & electronic products gave back all of an upwardly revised March gain and fell 10.4% (+10.0% y/y). Machinery orders, however, fell just 0.2% (+12.1% y/y) after a 5.7% April increase that was little revised. Electrical equipment orders rose for the first month in three, up 5.2% (15.7% y/y), while orders for primary metals jumped 3.2% (16.6% y/y).
Orders for nondefense capital goods gave back half of the prior month's surge with a 6.0% drop while orders less aircraft fell 1.7% but remained 9.4% ahead of the year ago level. During the last ten years there has been an 86% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment & software from the GDP accounts.
Shipments of durable goods fell 0.9% (+6.0% y/y) following two months of 0.3% gain. Less the transportation sector shipments fell 0.1% (+8.1% y/y) for the second consecutive month. During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods.
Order backlogs jumped 1.5% (23.0% y/y), again reflecting a surge in nondefense aircraft & parts (75.1% y/y). Less transportation backlogs were strong again and posted a 1.1% (13.7% y/y) rise. The ratio of backlogs to shipments outside of transportation jumped to the highest level in two years.
Durable inventories increased 0.8% (2.9% y/y). Less transportation inventories also rose 0.8% (3.3% y/y) and the inventory to sales ratio outside of the transportation sector rose for the second month.
| NAICS Classification | April | Mar | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Durable Goods Orders | -4.8% | 6.6% | 11.3% | 9.0% | 6.4% | -0.6% |
| Excluding Transportation | -1.1% | 3.5% | 10.3% | 9.4% | 7.6% | -1.7% |
| Nondefense Capital Goods | -6.0% | 11.9% | 18.6% | 21.4% | 5.6% | -3.4% |
| Excluding Aircraft | -1.7% | 3.6% | 9.4% | 12.3% | 2.8% | -2.0% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
