Econoday Economic Report: Durable Goods Orders June 27, 2012

2012 Economic Calendar

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Durable Goods Orders

Released On 6/27/2012 8:30:00 AM For May, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
New Orders - M/M change	0.2 %	-0.2 %	0.4 %	-1.0 % to 1.0 %	1.1 %
New Orders - Yr/Yr Change	6.9 %	6.5 %			4.6 %
Ex-transportation - M/M	-0.6 %	-0.6 %	0.8 %	-0.5 % to 1.5 %	0.4 %
Ex-transportation - Yr/Yr	6.3 %	6.3 %			3.8 %

Highlights
The manufacturing sector has been a little shaky the last couple of months, depending on the indicator. But today's durables report shows some bounce in this sector. New factory orders for durables rebounded 1.1 percent in May after a 0.2 percent dip the month before (prior revised estimate, no change). The latest number came in higher than the market consensus for a 0.4 percent boost. Overall durables got sizeable lift from aircraft orders.

Excluding transportation, durables rose 0.4 percent after a revised 0.6 percent drop in April (prior revised estimate, down 0.9 percent). The rebound was below analysts' forecast for a 0.8 percent jump. Prior revised are from the full factory orders report for the prior month.

The transportation component was notably strong, jumping 2.7 percent after a 0.8 percent rise in April. By subcomponents, nondefense aircraft gained 4.9 percent, following a 0.1 percent rise in April. Auto manufacturers should be happy-new orders for motor vehicles advanced 0.5 percent even after a strong 5.7 percent boost in April. Defense aircraft made a partial comeback, rising 6.9 percent in May after dropping 36.1 percent the month before.

Outside of transportation, component strength was in machinery and in electrical. On the downside were primary metals, fabricated metals, and computers & electronics. "Other" was flat.

While the outlook for the aircraft components of equipment investment has been strong (but volatile monthly), the non-aircraft component has weakened in recent months. But the May number showed some improvement as nondefense capital goods orders excluding aircraft rose 1.6 percent in May, following a 1.4 percent decline the prior month. Shipments for this series rose 0.4 percent in May after decreasing 1.5 percent in April.

Overall, manufacturing in recent months has been sluggish but the May durables report indicates that there is still growth.

On the news, equity futures were little changed.

Market Consensus before announcement
Durable goods orders were unchanged in April, following a 3.7 percent decrease the month before. Excluding transportation, durables declined 0.9 percent after a 0.8 percent drop in March. The transportation component posted a 2.1 percent boost. Subcomponent strength was in nondefense aircraft and motor vehicles. Weakness was widespread outside of transportation. Numbers reflect revisions from the more recent total factory orders report.

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

Released On: 1/26 2/28 3/28 4/25 5/24 6/27 7/26 8/24 9/27 10/25 11/27 12/21

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