May Durable Orders
Updated 24-Jun-09 09:05 ET
Highlights
- New orders for durable goods increased 1.8% in May and were up 1.1%, excluding transportation. That was good news from the standpoint that each number easily topped the consensus estimates, which called for a -0.9% decline in total orders and a -0.5% decline, excluding transportation.
- Shipments declined -2.1% to $169.9 bln. That was the tenth straight month in which a decline was registered.
- Unfilled orders for durable goods slipped -0.3% to $747.5 bln and were down for the eighth straight month, suggesting capacity utilization rates won't be cranked up anytime soon.
- Nondefense capital goods orders, excluding aircraft, jumped 4.8% in May.
Key Factors
- Shipments will continue to factor as a negative (though not as much as before) in GDP estimates as the Q2 average of $171.69 bln currently stands 3.1% below the first quarter average of $177.23 bln.
- The increase in nondefense capital goods orders, excluding aircraft, will be read initially as a positive indication for business investment spending activity, although it may just be a temporary pickup after declines of -2.9% in April and -1.4% in March.
Big Picture
- Durable goods orders trends were very weak in late 2008 and early 2009. This reflects the collapse of confidence in the business sector and poor credit market conditions. The rate of decline should ease and orders might stabilize in mid or late 2009, but the outlook has to be described as grim. Overseas demand is particularly weak and exports are plunging. The business sector is in a deep slump.
| Category |
MAY |
APR |
MAR |
FEB |
JAN |
| Total Durable Orders |
1.8% |
1.8% |
-2.2% |
1.6% |
-7.8% |
| Less Defense |
1.4% |
0.6% |
-2.4% |
-0.1% |
-4.6% |
| Less Transport |
1.1% |
0.4% |
-2.8% |
1.4% |
-6.5% |
| Transportation |
3.6% |
6.2% |
-0.1% |
2.4% |
-11.9% |
| Capital Goods |
9.5% |
1.7% |
-2.6% |
8.5% |
-15.6% |
| Nondefense |
10.0% |
-2.9% |
-1.0% |
4.7% |
-9.9% |
| Nondefense/nonaircraft (core cap gds) |
4.8% |
-2.9% |
-1.4% |
4.1% |
-12.3% |
| Defense Cap Goods |
7.4% |
28.5% |
-11.1% |
33.1% |
-40.5% |
