Econoday Economic Report: Durable Goods Orders May 24, 2012

2012 Economic Calendar

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Durable Goods Orders

Released On 5/24/2012 8:30:00 AM For Apr, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
New Orders - M/M change	-4.2 %	-3.7 %	0.5 %	-1.4 % to 2.6 %	0.2 %
New Orders - Yr/Yr Change		1.8 %			6.9 %
Ex-transportation - M/M	-1.1 %	-0.8 %	0.7 %	-0.2 % to 1.5 %	-0.6 %
Ex-transportation - Yr/Yr		5.4 %			6.3 %

Highlights
Headline durables orders were up and close to expectations but core orders unexpectedly declined. Durables orders made a slight 0.2 percent comeback in April, following a 3.7 percent decrease the month before (prior revised estimate, down 3.9 percent). Analysts forecast a 0.5 percent gain for April.

Excluding transportation, durables declined 0.6 percent after a revised 0.8 percent drop in March (prior revised estimate, down 1.1 percent). The April decrease fell short of market expectations for a 0.7 percent rise.

The transportation component posted a 3.1 percent boost after rising 2.3 percent in March. Subcomponent strength was in nondefense aircraft, up a monthly 7.2 percent, and motor vehicles, up 5.6 percent. Defense aircraft dropped a monthly 34.0 percent.

Weakness was widespread outside of transportation. Declines were led by machinery and fabricated metals with declines also seen in computers & electronics and in electrical. Those showing improvement were primary metals and "other."

The outlook for near-term business investment in equipment has softened over the last two months.
New orders for nondefense capital goods excluding aircraft declined 1.9 percent in April and dipped 2.2 percent in March but followed a gain of 2.9 percent in February. Shipments for this series eased 1.4 percent in March, following a 1.9 percent boost the prior month.

Today's report indicates softening in the manufacturing sector. While manufacturing surveys do not always track government statistics, traders likely will be looking for more encouraging news from these surveys in coming weeks.

On the news, equity futures declined moderately. Released at the same time, initial jobless claims essentially were as forecast.

Market Consensus before announcement
Durable goods orders declined 3.9 percent in March after a 2.0 percent rebound the previous month. Excluding transportation, durables posted a 1.3 percent decrease after a 1.8 percent increase in February. Consensus notes numbers include annual revisions released May 18.

The transportation component plunged a monthly 9.9 percent in March after rising 2.6 percent the month before. Subcomponent weakness was led by a 43.6 percent plunge in new orders for nondefense aircraft (Boeing orders). Outside of transportation, declines were broad based.

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

2012 Release Schedule

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