Durable Goods. The consumer leads the economy.
Reading Ahead of the Curve. The general thesis is that consumer slowdowns preceed recessions. Durable goods are 12% of PCE.
Weakness underlies durable goods report
From Tribune news services
July 27, 2007
Article Tools
WASHINGTON - Orders for big-ticket manufactured goods advanced in June by the largest amount in three months, reflecting a rebound in demand for airplanes, but economists were concerned by weakness in other areas.
The Commerce Department reported that orders for durable goods increased 1.4 percent last month, the best showing since a 5.1 percent increase in March. Orders had declined by 2.3 percent in May.
Outside of volatile transportation, however, orders surprised economists by falling by 0.5 percent, reflecting lack of strength in a number of other categories. That was the second straight drop in orders excluding transportation.
Orders for non-defense capital goods excluding aircraft, a category that is considered a good proxy for business investment, fell by 0.7 percent last month, following an even bigger 1.5 percent decline in May.
"The economy is sort of stuck in the mud here," said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. "The idea that we're going to get a pickup in the second half is wishful thinking at this point."
"The economy is clearly weak," said Richard DeKaser, chief economist at National City Corp. "We are expecting to see flat second-quarter spending on equipment and software."
The government will report on second-quarter growth on Friday, with many analysts believing the report will show a solid rebound to a roughly 3.2 percent advance, despite continued troubles in the housing industry. That would be up from 0.7 percent growth in the first quarter.
The report on orders for durable goods, items expected to last at least three years, showed that the strength was concentrated in aircraft, with many other sectors showing declines.
Orders for commercial airplanes soared 28.7 percent, reflecting strong demand for Boeing Co. aircraft. Aircraft orders, which are volatile from month to month, had fallen by 21 percent in May.
Overall transportation orders were up 6.1 percent, but that reflected the demand for commercial airliners and a 9.9 percent rise in orders for military aircraft. Orders for autos were down 1.4 percent last month.
Other sectors showing weakness were primary metals, including steel, which dropped by 3.6 percent and computers and electronic products, down 4.6 percent.
In other economic news, the Labor Department reported that the number of newly laid-off workers filing claims for unemployment benefits fell to 301,000 last week, down by 2,000 from the previous week. The performance was better than the slight rise that economists had been expecting.
Weakness underlies durable goods report
From Tribune news services
July 27, 2007
Article Tools
WASHINGTON - Orders for big-ticket manufactured goods advanced in June by the largest amount in three months, reflecting a rebound in demand for airplanes, but economists were concerned by weakness in other areas.
The Commerce Department reported that orders for durable goods increased 1.4 percent last month, the best showing since a 5.1 percent increase in March. Orders had declined by 2.3 percent in May.
Outside of volatile transportation, however, orders surprised economists by falling by 0.5 percent, reflecting lack of strength in a number of other categories. That was the second straight drop in orders excluding transportation.
Orders for non-defense capital goods excluding aircraft, a category that is considered a good proxy for business investment, fell by 0.7 percent last month, following an even bigger 1.5 percent decline in May.
"The economy is sort of stuck in the mud here," said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. "The idea that we're going to get a pickup in the second half is wishful thinking at this point."
"The economy is clearly weak," said Richard DeKaser, chief economist at National City Corp. "We are expecting to see flat second-quarter spending on equipment and software."
The government will report on second-quarter growth on Friday, with many analysts believing the report will show a solid rebound to a roughly 3.2 percent advance, despite continued troubles in the housing industry. That would be up from 0.7 percent growth in the first quarter.
The report on orders for durable goods, items expected to last at least three years, showed that the strength was concentrated in aircraft, with many other sectors showing declines.
Orders for commercial airplanes soared 28.7 percent, reflecting strong demand for Boeing Co. aircraft. Aircraft orders, which are volatile from month to month, had fallen by 21 percent in May.
Overall transportation orders were up 6.1 percent, but that reflected the demand for commercial airliners and a 9.9 percent rise in orders for military aircraft. Orders for autos were down 1.4 percent last month.
Other sectors showing weakness were primary metals, including steel, which dropped by 3.6 percent and computers and electronic products, down 4.6 percent.
In other economic news, the Labor Department reported that the number of newly laid-off workers filing claims for unemployment benefits fell to 301,000 last week, down by 2,000 from the previous week. The performance was better than the slight rise that economists had been expecting.
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