So your evidence that the economy is slowing down is that economies always slow down?
It was the first back-to-back decline in orders since early 2003. July's decline was revised lower to 2.7%.
Ominously, the report showed weak demand in almost every sector except defense and autos, which is undergoing a traumatic restructuring and is not likely to contribute much to growth in the medium-term.
The report turned an optimistic financial market around. Stock futures fell, the dollar weakened and bond prices rose.
Orders for core capital-goods equipment - business-investment goods -- fell 0.3% in August. Shipments of core capital goods rose 0.3% after a 1.6% gain in July, an indication that business investment could be weaker than expected in the third quarter after a surprising drop in the second quarter.
Continued strength in capital spending is considered to be essential to the expected soft landing in the U.S. economy.
Economists were expecting a small gain of around 0.5% in orders, according to a survey conducted by MarketWatch.
Durable-goods orders, while very volatile month-to-month, are considered a good leading indicator for manufacturing activity. The weak durable-goods report supports the surprising weakness in last week's Philadelphia Fed sentiment index. Other gauges of factory strength, however, have held up fairly well as the economy slows from a break-neck pace.
http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20060927-000608-0900
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