EmailEconomic
Last Update: 25-Apr-12 08:54 ET
Durable Orders
Highlights
- Durable goods orders declined in March, falling 4.2% after increasing a downwardly revised 1.9% (from 2.4%) in February. The Briefing.com consensus expected orders to fall 1.7%.
- Excluding transportation, orders dropped 1.1% in March after increasing 1.9% in February. The March decline was well below the consensus estimate of 0.5% growth.
Key Factors
- A large portion of the March decline -– but not the entire portion -- can be attributed to a weaker performance from Boeing (BA). Nondefense aircraft orders fell 47.6%, which pulled down aggregate transportation orders 12.5%.
- The drop in orders excluding transportation, however, should not have been shocking. With the lone exception of the Kansas City Fed, all of the March regional manufacturing surveys showed notable demand slowdowns.
- Business investment orders contracted in March as orders for nondefense capital goods excluding aircraft fell 0.8%. Orders increased 2.8% in February. The lack of demand in March, however, will not affect first quarter GDP negatively since shipments of business capital goods increased 2.6%.
Big Picture
- The drop in investment demand in January is likely due to strong orders growth immediately prior to the Dec. 31, 2011 expiration of the accelerated depreciation tax credit. Demand should accelerate in the coming months as the negative effects from the tax credit lessen.
| Category | MAR | FEB | JAN | DEC | NOV |
|---|---|---|---|---|---|
| Total Durable Orders | -4.2% | 1.9% | -3.5% | 3.3% | 4.2% |
| Less Defense | -4.6% | 1.5% | -4.0% | 3.9% | 4.5% |
| Less Transport | -1.1% | 1.9% | -2.8% | 2.3% | 0.3% |
| Transportation | -12.5% | 1.8% | -5.2% | 6.3% | 16.6% |
| Capital Goods | -8.9% | 1.8% | -3.4% | 5.2% | 8.0% |
| Nondefense | -10.5% | 1.0% | -5.0% | 6.9% | 9.3% |
| Nondefense/nonaircraft (core cap gds) | -0.8% | 2.8% | -3.4% | 3.5% | -1.5% |
| Defense Cap Goods | 10.3% | 11.2% | 23.1% | -16.4% | -6.7% |
