Durable Goods Data Points to Flat Economy

It should come as little surprise that durable goods data is inconsistent with economic expansion.   Econintersect further disagrees with the US Census Bureau whose analysis concludes that durable goods sales were down in December 2010 – and believes sales were flat.

However, there was a massive decline in airplane new orders which, if ignored, would lead Econintersect to the conclusion that otherwise durable goods grew.

According to US Census:

New Orders: New orders for manufactured durable goods in December decreased $5.0 billion or 2.5 percent to $191.0 billion, the U.S. Census Bureau announced today. This decrease, down four of the last five months, followed a 0.1 percent November decrease. Excludingtransportation, new orders increased 0.5 percent.  Excluding defense, new orders decreased 2.5 percent.  Transportation equipment, also down four of the last five months, had the largest decrease, $5.8 billion or 12.8 percent to $39.2 billion. This was due to nondefense aircraft and parts, which decreased $5.0 billion.

Shipments: Shipments of manufactured durable goods in December, up three of the last four months, increased $2.8 billion or 1.4 percent to $200.4 billion. This followed a 0.5 percent November increase.  Machinery, up four of the last five months, had the largest increase, $1.7 billion or 6.7 percent to $27.1 billion.

Unfilled Orders: Unfilled orders for manufactured durable goods in December, down following eight consecutive monthly increases, decreased $3.6 billion or 0.4 percent to $822.8 billion. This followed a 0.5 percent November increase.  Transportation equipment, down two consecutive months, had the largest decrease, $8.7 billion or 1.8 percent to $473.6 billion.

The data disagrees with the US Census conclusions that new orders declined.

When the changes MoM are compared YoY, December 2010 has grown over November 2010 if the comparison is to pre-Great Recession, and shrank in comparison to post-Great Recession data.

Overall, Econintersect sees the data as inconclusive to support a position that there was any increase or decrease MoM in December 2010.  However, the trend line of YoY improvements is declining in durable goods.

A six month decline in YoY improvement is not indicative of an expanding economy – and suggests the economy is not really growing.

On the other hand, backlog or unfilled orders again increased in December demonstrating that this industry is properly sized for the demand.

Related Articles

Philly Fed Business Survey Implies Conditions Improving by Steven Hansen

Empire State Manufacturing Survey Up and Noisy by Steven Hansen

Thank the Weather for Industrial Production Increase in December 2010 by Steven Hansen

Manufacturing New Orders Remain Flat in November 2010 by Steven Hansen

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