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 5/24/07 For Apr 2007 | ||||||||||||
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Highlights
Durable goods orders continued to show healthy growth in April. Durable goods orders rose 0.6 percent in April, following a 5.0 percent boost in March. The consensus had forecast a 1.2 percent increase in durables orders for April. March was revised up to a 5.0 percent gain, compared to the prior estimate of a 4.3 percent jump. Excluding the volatile transportation component, new orders rose 1.5 percent, also following a 1.5 percent advance in March.
Strength in orders in April was mixed. Industry categories posting gains in April were primary metals, up 4.3 percent; fabricated metal products, up 3.8 percent; and electrical equipment, up 3.8 percent.
Industry categories showing declines in April were machinery, down 1.7 percent; computers & electronics, down 0.1 percent; and transportation, down 1.3 percent.
Within transportation, nondefense aircraft fell 10.7 percent, defense aircraft increased 19.5 percent, and motor vehicles fell 1.9 percent.
Nondefense capital goods slipped 0.8 percent, following a 13.7 percent surge the prior month. Excluding aircraft, nondefense capital goods orders rose 1.2 percent in April, following a 4.4 percent jump in March.
Overall inventories of durable goods jumped 0.5 percent, following a 0.1 percent increase in March. Overall shipments increased 1.9 percent in April while unfilled orders rose 1.8 percent. Shipments of non-defense capital goods rose 0.9 percent in April, following a 1.6 percent advance in March. The continued rebound in these shipments indicates improvement for second quarter investment in producers' durable equipment & software within GDP.
Today's report shows a moderately healthy manufacturing sector that could cause bond rates to firm. Equity markets should like the fact that the economy is healthy but could see the impact on rates as a negative.
Durable goods orders rose 3.7 percent in March, led by machinery and transportation. Defense aircraft and construction machinery were notably strong for the month. Excluding transportation, durables orders were up 1.3 percent in March, following a 0.6 percent dip the month before. Manufacturing has begun to strengthen with the last couple of industrial production reports, and another good durables report would be favorable for manufacturing.
New orders for durable goods Consensus Forecast for April 07: +1.2 percent
Range: -1.5 percent to +3.1 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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