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Durable Goods Orders

09/28/2011
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
     

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