Global| Jul 27 2006U.S. Durable Goods Orders Surged
by:Tom Moeller
|in:Economy in Brief
Summary
New orders for durable goods surged 3.1% in June after an upwardly revised 0.3% increase during the prior month. Consensus expectations had been for a somewhat lesser 2.0% jump. An 8.8% rise in orders for nondefense aircraft & parts [...]
New orders for durable goods surged 3.1% in June after an upwardly revised 0.3% increase during the prior month. Consensus expectations had been for a somewhat lesser 2.0% jump.
An 8.8% rise in orders for nondefense aircraft & parts recovered not quite half of the 19.2% drop during May. Orders for defense aircraft jumped 12.9% (25.4% y/y).
Less the transportation sector altogether durable goods orders rose a firm 1.0%.
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 recovered nearly all of the prior month's decline with a 1.3% gain. Less aircraft, orders rose a more moderate 0.4% during June but the prior month's increase was upwardly revised to 1.3%. 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.
Higher orders for computers & electronic products led last month's strength with a 3.4% (0.8% y/y) spurt though computer orders alone rose just 1.5% (-2.3% y/y) after a downwardly revised 3.0% slip during May. Machinery orders slipped 0.3% (+10.5% y/y) after an upwardly revised 4.3% May increase. Orders for electrical equipment & appliances fell 1.0% (+15.0% y/y) but the prior month was very much upwardly revised to show a 2.7% increase.
Shipments of durable goods ticked up 0.1% (8.4% y/y) after an upwardly revised 3.0% May jump. Shipments less the transportation sector rose 0.4% (9.9% y/y) but the May jump was revised up to 2.1%. 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 gained 1.7% (19.4% y/y) again reflecting the strength in nondefense aircraft & parts (53.7% y/y). Unfilled orders less transportation gained another 1.3% (14.1% y/y).
Durable inventories rose 0.6% (4.9% y/y) after an upwardly revised 0.7% May rise. Less transportation inventories also rose 0.6% (5.4% y/y). The inventory to sales ratio outside of the transportation sector rose slightly.
| NAICS Classification | June | May | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Durable Goods Orders | 3.1% | 0.3% | 5.8% | 9.0% | 6.4% | -0.6% |
| Excluding Transportation | 1.0% | 1.5% | 9.1% | 9.4% | 7.6% | -1.7% |
| Nondefense Capital Goods | 1.3% | -1.9% | 3.5% | 21.4% | 5.6% | -3.4% |
| Excluding Aircraft | 0.4% | 1.3% | 7.7% | 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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