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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 %

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.

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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