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Durable Goods Orders  
Released On 1/29/2009 8:30:00 AM For Dec, 2008
PriorConsensusConsensus RangeActual
New Orders - M/M change-1.0 %-2.0 %-6.0 % to 1.2 %-2.6 %
New Orders - Yr/Yr Change-13.2 %
Ex-transportation - M/M-3.6 %

Durable goods orders in December fell again and it's worse than the headline number suggests. Durable goods orders declined another 2.6 percent in December, following a 3.7 percent decrease in November. The contraction in December was worse than the market forecast for a 2.0 percent fall. Excluding the transportation component, new orders slipped 3.6 percent, after falling 1.7 percent the prior month. The consensus had projected a 2.7 percent drop for the latest month. The really bad news is that the contraction in orders is quite widespread. All major industries posted declines except for electrical equipment and transportation. And transportation would have been quite negative other than for a spike in defense aircraft. It is clear that the recession in manufacturing is deepening, reflecting a near stoppage in the auto industry and weakness elsewhere.

The drop in November – as in October - was led by computers & electronics and by primary metals, which fell 7.2 percent and 6.9 percent, respectively. Fabricated metals and machinery also declined by 3.6 percent and 5.0 percent, respectively.

On the positive side, electrical equipment posted a 9.4 percent rebound while transportation squeezed out a 0.6 percent bump up in new orders. But the transportation rise was due to a 16.4 percent jump in defense aircraft-motor vehicles and nondefense aircraft dropped 5.2 percent and 43.6 percent, respectively.

Year-on-year, new orders for durable goods fell further to down 21.1 percent in December from down 15.7 percent in November.

Overall, today's numbers show a deeper contraction in the manufacturing sector. Equities are likely to react negatively while bond yields could slip. But earnings are still a key focus and could have greater impact on the markets.

Recent History Of This Indicator
Durable goods orders in November continued to contract. Durable goods orders fell 1.5 percent in November, following an 8.5 percent drop in October (previously estimated as 1.0 percent and 8.4 percent, respectively in the advance report). Excluding the transportation component, new orders partially rebounded 0.6 percent, after declining 6.9 percent the month before. Strength in the latest month was primarily in defense capital goods. Excluding defense, new orders fell 0.9 percent.

New orders for durable goods Consensus Forecast for December 08: -2.0 percent
Range: -6.0 percent to +1.2 percent

New orders for durable goods, ex-trans., Consensus Forecast for December 08: -2.7 percent
Range: -4.0 percent to 0.0 percent

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.

Durable goods orders are available nationally by both industry and market categories. A new order is accompanied by a legally binding agreement to purchase for immediate or future delivery. Advance durable goods orders no longer include data on semiconductors since semiconductor manufacturers stopped releasing this information to the Census Bureau.

The advance durable goods report also contains information on shipments, unfilled orders and inventories. Shipments represent deliveries made, valued at net selling price after discounts and allowances, excluding freight charges and excise taxes. Unfilled orders are those received but not yet delivered.

In 2001, the Census Bureau shifted from the standard industrial classification (SIC) system to the North American Industrial Classification System (NAICS). This caused some realignment of major industry classifications. Given the significant revisions incurred, the historical data now begin in 1992.
 Why Investors Care
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.
Data Source: Haver Analytics

2009 Release Schedule
Released On: 1/292/263/254/245/286/247/298/269/2510/2811/2512/24
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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