Durable Goods: An Improvement of Sorts

According to the Census Bureau’s durable goods report:

New orders for manufactured durable goods in July increased $12.9 billion or 5.9 percent to $230.7 billion, the U.S. Census Bureau announced today. This was the fifth increase in the last six months and at the highest level since the series was first stated on a NAICS basis in 1992. This increase followed a 1.9 percent June increase. Excluding transportation, new orders increased 3.7 percent. Excluding defense, new orders increased 4.9 percent.

The news was generally treated quite favorably, such as this article from Reuters:

Analysts polled by Reuters were expecting durable goods orders to rise by 1 percent. Non-defense capital goods orders excluding aircraft, viewed as an indicator of business spending, gained 2.2 percent, the steepest climb since March.

U.S. stock index futures and the dollar rose on the strong economic news, while government debt prices pared gains….

Orders for computers and electronic products and machinery posted their sharpest gains since November 2006.

All of which, I suppose, is true – on a seasonally adjusted, month-over-month basis. On the year/year basis I prefer, which should not require any seasonal adjustments, the picture is a little – just a little – darker. year over year change in durable goods

There was a clear improvement – but in the longer outlook it wasn’t exactly breaking free of a downtrend and essentially resembled the September 2006 and April 2007 spikes that turned out to be head fakes. While it is certainly better than yet another decline, I’m not ready to throw a party. I did, however, shift the durable goods chit in my economic data table from the “bad and deteriorating” column to the “bad but improving” column. (By the way, subscribers can download my full spreadsheet with tables for all the major industry groups.)

[pay]durable goods [/pay]


Bad and Deteriorating Bad but Improving Good but Deteriorating Good and Improving
Existing Homes (June) Chicago Fed NAI (May) Consumer Confidence (June) Real Disposable Income
Employment (June) Durable Goods (June) Personal Spending (June) ISM Manufacturing (July)
New Home Sales (June) Construction Spending Retail sales (August 2007) ISM Services (June)
ATA Truck Tonnage (June) CPI (July 07) Leading Indicators (June)  
GDP (Q2 Advance) Trade deficit (July 07)    
PPI (July 07) Durable Goods (July)    
Industrial Production (July 07)      
Housing Starts (July 07)      

As to that spike in computers and electronic products, attribute it primarily to electronic products. The year/year change for computers continues to plummet.


Given the strength we’ve seen from several of the computer manufacturers, the data doesn’t bode well for Dell’s (DELL) earnings report this week.

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Topics: Computer Hardware, Dell (DELL), Durable Goods, Economy | RSS

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