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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.

Consensus Outlook
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 are new orders placed with domestic manufacturers for factory hard goods. The report also contains information on shipments, unfilled orders and inventories. The advance release provides early estimates and is revised about a week later by the factory orders report.  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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