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Economy in Brief

U.S. Durable Goods Orders Decline Unexpectedly
by Tom Moeller  March 24, 2011

The positive trend of new orders for durable goods has reversed. That's the message from the 0.9% decline in February orders following a 3.6% January gain, initially reported as 2.7%. Consensus expectations were for a 1.0% increase. An 8.7% rise in orders for aircraft & parts bolstered last month's total. Commercial aircraft bookings jumped 26.7% (-9.1% y/y) following a surge during January. Also, motor vehicle orders were strong (14.9% y/y), as they were in January. Excluding the transportation sector altogether, orders slipped 0.6% versus a +1.9% expectation. On a three-month basis orders fell at a 3.6% annual rate.

Weakness in orders outside of transportation was widespread last month. Orders for primary metals fell 2.1% and the y/y gain of 17.8% compares to a 36.8% rise during all of last year. Machinery orders also fell 4.2% (+12.4% y/y) after a larger January decline. The y/y gain is roughly half last year's. Orders for computers & related products (+7.6% y/y) fell for the fourth month in the last five. Bucking the trend last month was a 2.6% rise in electrical equipment orders and the 13.1% y/y gain was stable. Orders for nondefense capital goods jumped by 2.5% due to the gain in aircraft, but excluding aircraft they fell 1.3% and the y/y gain of 10.2% is down from last year's peak. On a three-month basis orders fell at a 13.4% annual rate.

Gains in shipments of durable goods have been more stable than orders. The 0.3% (7.3% y/y) February rise was roughly the same as during January. Less transportation, shipments ticked up 0.1% (8.3% y/y), the same as in January and the three-month increase of 8.9% roughly equaled last year's gain. Inventory accumulation continued to bolster factory sector activity. A 0.9% February gain left the three-month increase of 10.8% up from last year's 9.2% rise. Unfilled orders moved 0.4% higher (4.4% y/y) last month.

Shifting Winds and Currents of Recovery from the Federal Reserve Bank of Dallas can be found here.

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

NAICS Classification (%) Feb Jan Dec Y/Y 2010 2009 2008
Durable Goods Orders -0.9 3.6 -0.6 6.2 13.6 -20.7 -9.0
  Excluding Transportation -0.6 -3.0 2.7 8.5 13.8 -18.4 -2.5
Nondefense Capital Goods 2.5 6.6 -3.7 6.4 21.9 -26.8 -12.6
  Excluding Aircraft -1.3 -6.0 4.0 10.2 16.9 -19.8 -4.2
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