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 4/25/07 For Mar 2007 | ||||||||||||
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Highlights
Durable goods orders strengthened in March - even outside of aircraft. Durable goods orders increased 3.4 percent in March, following a 2.4 percent partial rebound in February. The consensus had projected a 2.2 percent rise in durables orders for March. Additionally, February was revised up to a 2.4 percent boost, compared to the initial estimate of a 1.7 percent increase. Excluding the volatile transportation component, new orders rose 1.5 percent, following a 0.4 percent decline in February. Capital goods orders continued to improve in March.
Strength in orders in March was broad based. Industry categories posting gains in March were primary metals, up 2.5 percent; fabricated metal products, up 1.2 percent; machinery, up 4.2 percent; communications equipment, up 12.3 percent; electrical equipment, up 2.5 percent; transportation, up 8.0 percent; and "other," up 0.4 percent. The only major industry category showing weakness was computers & electronics, which declined 0.1 percent.
Within transportation, nondefense aircraft increased 37.6 percent, defense aircraft fell 48.8 percent, and motor vehicles rose 3.3 percent.
Nondefense capital goods orders continued to improve from January's 20.2 percent drop with an 11.7 percent boost in March, after a partial rebound of 9.8 percent in February. Excluding aircraft, nondefense capital goods orders still rose 4.7 percent in March, following a 2.3 percent decline the previous month. The rebound in capital goods orders is quite a positive given recent worries that business equipment investment might not just be moderating but actually declining.
Overall inventories of durable goods rose 0.3 percent, following a 0.1 percent increase in February. Overall shipments posted a 0.8 percent gain in March while unfilled orders rose 1.8 percent. Shipments of non-defense capital goods made a partial rebound in March with a 0.9 percent gain, following declines of 0.8 percent in February and 2.3 percent in January. While the orders data indicate some improvement in business equipment investment, the shipments numbers indicate that component in GDP will be weak in the first quarter. Shipments of non-defense capital goods make up the main source data for the business equipment component in GDP.
Year-on-year data turned down in March due to a very robust March 2006. Year-on-year, new orders for durable goods fell to down 2.1 percent in March from up 0.3 percent in February. Unfilled durables orders slipped to up 19.8 percent year-on-year in March from up 21.1 percent in February.
Overall, today's report shows modest strength in manufacturing. Equities should be boosted by this good news while bond prices are likely to dip.
Durable goods orders posted a 1.7 percent gain in February. But excluding transportation (which includes the volatile orders for aircraft), durables orders slipped 1.0 percent in February. Markets are expecting a boost in overall durables in March due primarily to a sharp increase in aircraft orders already made public by Boeing.
New orders for durable goods Consensus Forecast for March 07: +2.2 percent
Range: +0.8 percent to +6.4 percent
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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. |
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