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Durable Goods Orders  
Released On 2/26/2009 8:30:00 AM For Jan, 2009
PriorConsensusConsensus RangeActual
New Orders - M/M change-2.6 %-2.5 %-7.8 % to -0.8 %-5.2 %
Ex-transportation - M/M-3.6 %-2.5 %

Highlights
Durable goods orders in January fell for a record six consecutive months – though the series only starts in 1992. Durable goods orders plunged 5.2 percent in January, following a 4.6 percent drop in December. The fall in January was far worse than the consensus forecast for a 2.5 percent decrease. Excluding the transportation component, new orders declined 2.5 percent, after dropping 5.5 percent in December. The market had expected a 2.1 percent fall for the latest month. Weakness was broad-based but led by a drop in defense orders. Excluding defense, the latest month was down 2.3 percent.

By industry group, the largest decline was in transportation which dropped a monthly 13.5 percent. Within this group, defense aircraft orders were down 28.3 percent and motor vehicles fell 6.4 percent. Nondefense aircraft actually surged 81.7 percent. Every major industry group except communications equipment declined in January.

Year-on-year, overall new orders for durable goods weakened further to down 23.3 percent in January from down 22.9 percent in December.

Overall, the January durables report indicates that the recession in manufacturing is getting worse. This will further tug down on the overall economic growth and further impact jobs and income in the consumer sector. The downward spiral is continuing for now. Along with today's higher than expected initial jobless claims number, the durables report will weigh on equities and could lead to flight to safety in Treasuries. But markets also are looking at a possible deal that would give the Federal government a 40 percent stake in Citigroup to bolster this financial giant – and this is giving equity futures some lift.

Consensus Outlook
Durable goods orders in December pointed to a worsening manufacturing sector, dropping another 3.0 percent (revised), following a 4.0 percent decrease in November. Excluding the transportation component, new orders decreased 3.9 percent (revised), after falling 2.0 percent the prior month. Looking ahead, demand just is not there to boost orders. Retail spending is down, including for autos. Housing is keeping household durables spending and orders down. And even exports have turned down.

Definition
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
 
[Chart]
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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