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Durable Goods Orders  
Released On 3/25/2009 8:30:00 AM For Feb, 2009
PriorConsensusConsensus RangeActual
New Orders - M/M change-5.2 %-2.0 %-3.0 % to 1.0 %3.4 %
New Orders - Yr/Yr Change-23.4 %
Ex-transportation - M/M-2.5 %3.9 %
Ex-transportation - Yr/Yr-16.2 %

Durable goods orders in February shocked on the high side-coming in sharply positive. And it wasn't just transportation. Durable goods orders rebounded a strong 3.4 percent in February, following a 7.3percent plunge in January. The gain in February was far better than the consensus projection for a 2.0 percent decrease and even the consensus upper bound of plus 1.0 percent. New orders in February rose for the first time in seven months.

Excluding the transportation component, new orders made even more of a comeback, gaining 3.9 percent, after declining 5.9 percent in January. By industry components, increases were mixed but heavily on the positive side. The biggest negative in the report were downward revisions to January and December. January was revised to minus 7.3 percent from minus 5.2 percent while December was revised to minus 4.6 from minus 1.5.

By industry group, the largest gain was in machinery which jumped 13.5 percent, followed by computers which rebounded 10.1 percent. The volatile transportation component rose 2.0 percent on a 32.4 percent surge in defense aircraft and parts. Nondefense aircraft fell back 28.9 percent while motor vehicles slipped another 0.6 percent. Declining industry categories were primary metals, down 0.6 percent, and communications equipment, down 5.9 percent.

By special category, nondefense capital goods saw a rebound with a 7.4 percent boost-up 6.6 percent when excluding aircraft.
Year-on-year, overall new orders for durable goods improved to down 23.4 percent in February from down 25.1 percent in January. Excluding transportation, new durables orders rose to down 16.2 percent from down 20.3 percent the prior month.

Overall, today's durables report was a pleasant shock. There is more resilience in the manufacturing sector than most believed. More indicators are starting to fall in the improved or no longer falling categories. The durables numbers should boost equities but bond traders are still trying to figure out the Fed's new moves in Treasury markets. Also, new home sales are out at 10:00 ET this morning. They may not fare as well as existing home sales did.

Consensus Outlook
Durable goods orders in January plunged 4.5 percent (revised), following a 4.6 percent drop in December. Excluding the transportation component, new orders declined 3.0 percent, after dropping 5.7 percent in December. By industry group, the largest decline was in transportation, led by a fall in defense aircraft orders along with a decline in motor vehicles. Early indications for March are not good. For both the Philly and New York Fed manufacturing reports, the new orders index fell in both February and March. Both surveys have data for a given reference month that overlaps two actual months (the March report includes data from both late February and early March).

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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