Econoday Economic Report: Durable Goods Orders August 24, 2011

2011 Economic Calendar

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Durable Goods Orders

Released On 8/24/2011 8:30:00 AM For Jul, 2011

	Prior	Prior Revised	Consensus	Consensus Range	Actual
New Orders - M/M change	-2.1 %	4.1 %	2.0 %	0.0 % to 5.2 %	4.0 %
New Orders - Yr/Yr Change	7.6 %		0.1 %	-1.3 % to 7.5 %	9.2 %
Ex-transportation - M/M	0.1 %	0.6 %			0.7 %
Ex-transportation - Yr/Yr	7.1 %				9.6 %

Highlights
A monthly surge in new orders for motor vehicles & parts, the best in eight years, headlines a strong durable goods report for July. New orders for durable goods surged 4.0 percent in the month with the motor vehicle component up 11.5 percent in what appears to be the well anticipated Japanese-related snap back. Aircraft orders, which nearly always show wide month-to-month swings, rose 43 percent and together with motor vehicles made for a 14.6 percent jump in the transportation category. Excluding transportation, new orders rose a solid 0.7 percent following 0.6 and 0.8 percent gains in the two prior months.

A surge in overall shipments is another big plus for this report, up 2.5 percent on top of June's 1.1 percent gain. Primary metals show a third straight month of shipment strength as do motor vehicles and aircraft. Capital goods also show gains in shipments in what offers an early signal of strength for third-quarter business investment.

Other details show a steady 0.8 percent gain for overall inventories with unfilled orders showing an increasing rate of build, from 0.3 percent in June to 0.7 in July. But the one factor that limits the impact of this report on the economic outlook is that it's data for July. Early looks at August conditions, that is from the New York, Philly, and Richmond Feds, show significant contraction making it too soon to say whether manufacturing, which has been the economy's backbone, is once again re-accelerating.

Market Consensus before announcement
Durable goods orders in June fell a revised 1.9 percent (originally down 2.1 percent), following a rebound of 2.0 percent the prior month. Transportation was the weakest component, dropping a sharp 8.6 percent, following a 5.8 percent rebound in May. All major subcomponents of transportation were down but primarily nondefense aircraft. Excluding transportation, durables edged increased a revised 0.4 percent (originally up 0.1 percent) after rebounding 0.8 percent in May.

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

2011 Release Schedule

Released On: 1/27 2/24 3/24 4/27 5/25 6/24 7/27 8/24 9/28 10/26 11/23 12/23

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