Global| Aug 24 2006U.S. Durable Goods Firm Despite Volatile Aircraft
by:Tom Moeller
|in:Economy in Brief
Summary
New orders for durable goods backpedaled 2.4% last month after an upwardly revised 3.5% surge during June. Consensus expectations had been for a 0.5% dip. Again, volatile orders for nondefense aircraft & parts provided much of the [...]
New orders for durable goods backpedaled 2.4% last month after an upwardly revised 3.5% surge during June. Consensus expectations had been for a 0.5% dip.
Again, volatile orders for nondefense aircraft & parts provided much of the volatility with a 10.0% (+0.75 y/y) drop following a 7.3% June rise. Orders for defense aircraft offset some of last month's decline with a 9.0% jump (29.0% y/y).
Orders for motor vehicle & parts also were weak last month and fell 7.0% (-4.5% y/y).
Durable goods orders less the transportation sector altogether added 0.5% to a 2.2% July increase that was double the increase estimated initially.
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.
Orders for nondefense capital goods added 0.2% to the upwardly revised 2.1% June gain. Less aircraft, July orders jumped 1.5% after a 1.4% spike the month earlier which was revised up from 0.4%. 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.
Orders for computers & electronic products surged 4.6% (18.0% y/y after a 6.7% June gain (revised from 3.4%). Computer orders jumped 9.1% (12.2% y/y) though orders for communications equipment fell 10.5% (+8.3% y/y). Machinery orders jumped again, by 1.9% (18.5% y/y), while orders for electrical equipment & appliances slipped 0.7% (+14.8% y/y).
Shipments of durable goods dropped 1.3% (+7.9% y/y) though shipments less the transportation sector rose 0.6% (11.3% y/y). 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 rose 1.4% (20.1% y/y) as unfilled orders for nondefense aircraft & parts rose another 1.4% (50.9% y/y). Unfilled orders less transportation nevertheless jumped 1.8% (16.2% y/y).
Durable inventories jumped 1.0% (5.4% y/y) and less the transportation sector, inventories also rose 0.9% (5.8% y/y). The inventory to sales ratio outside of the transportation sector rose slightly to its highest level since April.
| NAICS Classification | July | June | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Durable Goods Orders | -2.4% | 3.5% | 9.7% | 9.0% | 6.4% | -0.6% |
| Excluding Transportation | 0.5% | 2.2% | 14.6% | 9.4% | 7.6% | -1.7% |
| Nondefense Capital Goods | 0.2% | 2.1% | 11.1% | 21.4% | 5.6% | -3.4% |
| Excluding Aircraft | 1.5% | 1.4% | 13.1% | 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.
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