Sharp Improvement in Durable Goods Manufacturing in March 2011

Durable Goods (manufactured goods whose usefulness continues for years) new orders sharply improved in March 2011:

New Orders – New orders for manufactured durable goods in March increased $5.0 billion or 2.5 percent to $208.4 billion, the U.S. Census Bureau announced today. This increase, up three consecutive months, followed a 0.7 percent February increase. Excluding transportation, new orders increased 1.3 percent. Excluding defense, new orders increased 2.3 percent.  Transportation equipment, also up three consecutive months, had the largest increase, $3.1 billion or 5.9 percent to $54.7 billion.

Shipments – Shipments of manufactured durable goods in March, up five consecutive months, increased $3.7 billion or 1.8 percent to $207.3 billion. This followed a 0.5 percent February increase. Transportation equipment, up four consecutive months, had the largest increase, $1.6 billion or 3.3 percent to $51.1 billion.
Unfilled Orders – Unfilled orders for manufactured durable goods in March, up eleven of the last twelve months, increased $6.6 billion or 0.8 percent to $843.4 billion. This followed a 0.7 percent February increase.  Transportation equipment, up three consecutive months, had the largest increase, $3.6 billion or 0.8 percent to $482.0 billion.

Manufacturing – having contracted more in the Great Recession of 2007 than another other sector of the economy – continues its methodical improvement.  Durable goods are almost half of manufacturing.

The economy was in a strong expansion phase a year ago and the current data is comparing well against this period – only slightly less good.  This month broke the continuing long term “less good” downtrend in new orders.

The data has contradictory trends to 2010 GDP (analysis here) where double digit growth was evidenced in computers and other electronic goods.  New orders in computers and other electronic goods are down over 18% in March 2011 YoY.  The other big drag on durable goods is defense products down from 11% to 14% depending on what is included.

The strong areas are widespread with the strongest YoY performance from non-military aircraft new orders.

Overall, this is a strong data set especially considering the cutback in government military spending.

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Strong Retail Sales Do Not Point to Real Economic Growth by Steven Hansen

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