| Durable Goods Orders |
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Released On 1/27/2011 8:30:00 AM For Dec, 2010
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| New Orders - M/M change | -1.3 % | -0.7 % | 1.5 % | -3.0 % to 2.8 % | -2.5 % | | New Orders - Yr/Yr Change | 9.4 % | 10.7 % | | | 6.9 % | | Ex-transportation - M/M | 2.4 % | 4.5 % | | | 0.5 % | | Ex-transportation - Yr/Yr | 10.6 % | 12.7 % | | | 11.5 % |
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Highlights
Durables orders are living up to their reputation as one of the most volatile monthly series in the U.S.-and the latest report was disappointing. Durables orders in December unexpectedly dropped 2.5 percent, following a revised 0.1 percent fall the month before. Weakness was primarily in nondefense aircraft orders. Excluding transportation, new orders for durable goods were more favorable, advancing 0.5 percent after a 4.5 percent surge in November. By industry, strength was mostly in machinery with others industries generally down but after healthy gains the prior month.
By major industries, transportation fell a monthly 12.8 percent in December after declining 13.1 percent the month before. The latest decline was mainly in nondefense aircraft which plunged a monthly 99.5 percent-again, essentially Boeing orders likely falling due to delays in its Dreamliner delivery dates. Also, within transportation, motor vehicles actually increased 1.7 percent while defense aircraft & parts fell back 10.9 percent.
Outside of transportation, strength was narrowly focused with machinery jumping 10.6 percent, after rising 0.3 percent in November. Other industries were down but generally after a notable gain the month before. Primary metals fell 4.7 percent-November in parenthesis (up 13.8 percent); fabricated metals down 1.0 percent (up 2.9 percent); computers & electronics down 1.2 percent (up 6.5 percent); electrical equipment down 0.1 percent (up 8.6 percent); and all others down 1.1 percent (up 0.8) percent.
Business investment in equipment continues to show strength outside of aircraft. Nondefense capital goods orders excluding aircraft in December rose 1.4 percent after gaining 3.1 percent the prior month. Shipments for this series rose 1.7 percent, following a 1.4 percent increase in November.
Overall, the report should be considered in light of ex-transportation showing the overall trend over two or three months. Essentially, manufacturing is still on an uptrend though one not as robust as believed last month.
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Market Consensus before announcement
Durable goods in November declined a revised 0.3 percent, following a 3.1 percent drop the prior month. Weakness was led by a drop in civilian aircraft orders. However, excluding transportation, new orders for durables jumped a revised 3.6 percent after a 2.0 percent contraction in October. Strength in core orders was broad based. Looking ahead, manufacturing surveys suggest a somewhat positive figure for December.
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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
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![[Chart]](showimage.asp?imageid=20314)
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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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