Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. The first release, the advance, provides an early estimate of durable goods orders. About two weeks later, more complete and revised data are available in the factory orders report. The data for the previous month are usually revised a second time upon the release of the new month's data. (Bureau of the Census, U.S. Department of Commerce) Why Investors Care
| Released on 3/28/07 For Feb 2007 | ||||||||||||
| ||||||||||||
Highlights
Durable goods orders rebounded in February but strength was primarily in aircraft orders. Durable goods orders rebounded 2.5 percent in February, following a sharp 9.3 percent drop in January. February's number was below the market expectation for a 3.4 percent boost in new durables orders. Also, January was revised down to minus 9.3 percent from the initial estimate of minus 8.7 percent. Excluding the volatile transportation component, new orders edged down 0.1 percent, following a 4.0 percent fall in January.
Strength in orders in February was in transportation, up 9.6 percent, and in computers & electronics, up 6.4 percent. Weakness was broad-based. Industry categories showing declines in February were primary metals, down 1.0 percent; fabricated metal products, down 2.3 percent; machinery, down 0.4 percent; electrical equipment, down 5.5 percent; and "other," down 1.3 percent.
Nondefense capital goods orders made a partial comeback in February, posting a 9.5 percent gain, following a 21.2 percent drop the month before. Excluding aircraft, nondefense capital goods orders slipped 1.2 percent in February, following a 7.4 percent decline in January, and a 4.0 percent increase in December.
Overall inventories rose 0.2 percent in the latest month, following a 0.4 percent gain in January. Overall shipments slipped 0.8 percent in February while unfilled orders rose 0.9 percent. Turning to a key input into the business equipment component of GDP, shipments of non-defense capital goods edged back up by 0.3 percent in January but were still soft in light of the 2.5 percent decline in January. The business equipment component in GDP for the first quarter is looking weak.
Year-on-year, new orders for durable goods declined to up 0.1 percent in February from up 4.6 percent in January. Unfilled durables orders stood at up 20.7 percent year-on-year in February compared to up 21.1 percent in January.
Overall, today's report shows a still soft manufacturing sector outside of aircraft. However, some softness is needed to help keep the economy a little below potential growth to help ease inflation. On the plus side, the impact of new orders weakness on actual production is being buffered somewhat by unfilled orders. The bond market will like the numbers while equities likely will not.
Durable goods orders fell a sharp 8.7 percent in January, following a 3.5 percent gain the prior month. January was led downward largely by lower aircraft orders for Boeing. Nonetheless, excluding transportation, durables were down 4.0 percent, compared to up 3.2 percent in December. Recent surveys on the manufacturing sector have been mixed for February and March and the February durables data will give the first comprehensive forward looking numbers for manufacturing.
New orders for durable goods Consensus Forecast for February 07: +3.4 percent
Range: +0.5 percent to +4.6 percent
![[Chart]](chart.gif)
|
Monthly fluctuations in durable goods orders are frequent and large and skew the underlying trend in the data. In fact, even the yearly change must be viewed carefully because of the volatility in this series. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}