Econoday Economic Report: Durable Goods Orders June 24, 2010

2010 Economic Calendar

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Durable Goods Orders

Released On 6/24/2010 8:30:00 AM For May, 2010

	Prior	Prior Revised	Consensus	Consensus Range	Actual
New Orders - M/M change	2.9 %	-0.5 %	-0.5 %	-2.5 % to 1.5 %	-1.1 %
New Orders - Yr/Yr Change	18.9 %	19.1 %			14.9 %
Ex-transportation - M/M	-1.0 %	-0.8 %			0.9 %
Ex-transportation - Yr/Yr	18.0 %	18.5 %			17.6 %

Highlights
The May durables report showed a headline number slipping from an April spike. But there was moderate strength in the details. New factory orders for durable goods in May declined 1.1 percent after jumping a revised 3.0 percent in April. Overall new orders for durables were worse than the market forecast for a 0.5 percent dip.

Excluding the transportation component, however, new durables orders rebounded 0.9 percent, following a 0.8 percent decrease in April. Capital goods orders continued to gain, rising 0.5 percent after a 0.7 percent boost in April.

The big negative in the report was the transportation component which dropped 6.9 percent in May. Nondefense aircraft swung down 29.6 percent after spiking 215.7 percent in April. Yes, you might call that category volatile. Defense aircraft slipped 7.1 percent in the latest month. But a very notable positive in transportation was a 0.7 percent boost in autos, continuing several monthly gains.

Advances were widespread in other components-including primary metals, machinery, computers & electronics, and other durables. Declines were seen in fabricated metals, communication equipment, and in electrical equipment. The last was negative but essentially flat

Nondefense capital goods orders excluding aircraft in May made a 2.1 percent comeback after falling 2.7 percent the month before. Shipments for this category fell 1.6 percent in May, following no change in April.

Year-on-year, overall new orders for durable goods in May were up 14.9 percent, compared to 19.1 percent in April. Excluding transportation, new durables orders came in at up 17.6 percent, compared to 18.5 percent in April.

On the release, equity futures rose, turning less negative. Also, initial jobless claims dropped more than expected. The good news is that manufacturing remains on an uptrend-a nice contrast to housing currently.

Market Consensus before announcement
Durable goods orders in April surged a revised 2.8 percent after edging up 0.1 percent the month before. The jump in the headline number was led by huge boost in the transportation component. The swing was largely in civilian aircraft orders. Excluding the transportation component, new durables orders slipped a revised 1.1 percent after a 4.9 percent spike in March.

Definition
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. 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

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