Global| May 28 2008U.S. April Durable Goods Orders Off Less Than Expected; Rose Excl Transportation
by:Tom Moeller
|in:Economy in Brief
Summary
April new orders for durable manufactured goods dipped 0.5% after slipping a little revised 0.3% during March. Consensus expectations had been for a 1.1% decline in April. Outsized weakness in orders for transportation equipment [...]
April new orders for durable manufactured goods dipped 0.5% after slipping a little revised 0.3% during March. Consensus expectations had been for a 1.1% decline in April.
Outsized weakness in orders for transportation equipment accounts for much of this year's weakness in new orders. Overall, orders in the transportation sector this year are down 18.7% led by a 34.1% drop in orders for nondefense aircraft. Orders for motor vehicles & parts also are down 10.6% YTD. Less the transportation sector altogether, durable goods orders actually rose 2.5% last month and have risen 2.1% so far this year.
Orders for nondefense capital goods fell 1.4% during April and that completely offset a 1.4% March gain. Here again, however, the latest decline stems from the transportation sector. Less aircraft, nondefense capital goods orders rose 4.2% in April and that recovered declines during the prior three months. Since yearend these orders have risen 1.4%. During the last ten years there has been an 80% correlation between the y/y gain in nondefense capital goods orders and the rise in equipment & software spending in the GDP accounts. The correlation with capital goods shipments is, as one would expect, a larger 92%.
Orders for machinery were strong last month and rose 4.2% (14.5% y/y). Year-to-date machinery orders rose 2.5% after last year's 0.6% uptick.Orders for computers & related products, however, slipped 1.5% and are down 0.5% so far this year. New orders for communications equipment rose 2.2% last month but likewise are down 2.1% in 2008. Also, to the upside were April primary metal orders. They surged 2.8% and are up 6.8% this year.
Overall shipments of durable goods surged 1.2% last month and less the transportation sector shipments also rose a firm 1.3%. Less transportation shipments have risen 1.9% this year after last year's 0.3% uptick.
Inventories of durable goods rose 0.5% during April and year-to-date inventories have increased 2.4% following last year's 3.5% rise. Less transportation, inventories rose 0.4% last month and by 1.7% this year, about the same as during all of 2007.
Has Inventory Volatility Returned? A Look at the Current Cycle from the Federal Reserve Bank of New York can be found here.
| NAICS Classification | April | March | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Durable Goods Orders | -0.5% | -0.3% | -3.4% | 1.4% | 6.2% | 10.2% |
| Excluding Transportation | 2.5% | 1.7% | 3.0% | -0.3% | 9.1% | 9.1% |
| Nondefense Capital Goods | -1.4% | 1.4% | -4.8% | 3.5% | 9.4% | 17.3% |
| Excluding Aircraft | 4.2% | -1.0% | 2.4% | -2.7% | 10.7% | 11.6% |
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.
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