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Durable Goods Orders  
Released On 8/26/2009 8:30:00 AM For Jul, 2009
PriorConsensusConsensus RangeActual
New Orders - M/M change-2.5 %2.5 %0.9 % to 8.0 %4.9 %
New Orders - Yr/Yr Change-26.8 %
Ex-transportation - M/M1.1 %0.8 %
Ex-transportation - Yr/Yr-24.1 %

Aircraft orders and auto orders made for a surge in the manufacturing sector during July, another key factor suggesting that the recession has already come to an end. New orders for durable goods shot up 4.9 percent. Excluding an 18.4 percent surge in transportation, orders still rose a strong 0.8 percent. Civilian aircraft orders rose more than six fold while motor vehicle orders, likely boosted by cash for clunkers, rose 0.9 percent. Capital goods orders were extremely strong, up 9.5 percent following a 5.7 percent drop in June. The report even includes an upward revision to the prior month's orders, to minus 1.3 percent from minus 2.2 percent. Details include big gains for primary metals, fabricated metals, computers & electronics, communication equipment, and even electrical equipment in a gain that hints at improving construction demand. Machinery orders did fall substantially but couldn't make a dent into the capital goods reading.

Shipments of durable goods also increased, up 2.0 percent in a gain that gets third-quarter output data off to a good start. Despite all the orders and shipments, manufacturers continue to draw down inventories which fell 0.8 percent to extend a long string of declines. Watch for the inventory index in the August ISM manufacturing report which may very well jump given how heavy July's business was. The jump in new orders has yet to move into unfilled orders which dipped 0.1 percent in the month.

The data had no significant impact on the financial markets, in part because a big gain was expected and in part because this report is often very volatile. Also, whether the gain in aircraft orders can be repeated is an open question and a retreat in this category could pull down data for August. Still, the manufacturing sector, the first to dip into recession, appears to be among the first sectors to have emerged from recession.

Consensus Outlook
Durable goods orders in June dropped sharply, largely on a plunge in civilian aircraft orders. Overall durable goods orders fell back a revised 2.2 percent in June, following a r boost of 1.3 percent the month before. The big negative in June was transportation which dropped a revised 13.2 percent within which civilian aircraft orders fell 38.6 percent. But excluding the transportation component, new durables orders advanced a revised 1.6 percent, following a 0.8 percent gain in May. Looking ahead, we may get another advance as the ISM new orders index for July jumped into positive territory again to 55.3 from 49.3 in June.

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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