Financial Professionals


Durable Goods Orders

U.S. durable goods orders fell 0.1% in August, ahead of expectations for a decline of 0.2%. Within the report, there is evidence that business spending is continuing in defiance of those calling for an impending recession.
Let’s take a look inside the numbers:
  • New orders for nondefense capital goods, including computers and communications hardware, rose 1.1%, the largest increase since May. (Fig 1.1). Historically this component of the report acts as a proxy for future business investment.
      • Computers rose 5.5%.
      • Communications hardware rose 7.8%.
    • Nondefense capital goods shipped excluding aircraft, an integral component in the calculation of GDP, rose 2.8% over the month before, the largest increase since March (Fig 1.2). Machinery shipments in particular were very strong, rising 5.1%. In addition, last month’s slight decline was revised to a 0.4% rise. 
    • Total Inventories rose 0.9%.
    • The overall 0.1% decline in durable goods orders was heavily impacted by the sensitive automobiles and parts component which declined 8.5% month on month.

    Fig 1.1 U.S. Capital Goods New Orders Nondefense, April 2011 to August 2011

    Source: Bloomberg
    Fig 1.2 U.S. Capital Goods Shipped Ex-Aircraft, January 2011 to August 2011

    Source: Bloomberg

Past performance is not a guarantee of future results.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.