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FreeRepublic , LLC
PO BOX 9771
FRESNO, CA 93794
Posted on 09/30/2002 6:10:08 AM PDT by john bell hood
New orders for durable goods slipped just 0.6% in August, following a revised 8.6% surge in July (originally 8.7%). Non-defense new orders gained 0.6%, and have increased 9.6% at an annual rate in the last six months. Despite the slight dip in August, new orders are up 12.8% at an annualized rate in the last three months, indicating that the manufacturing sector remains healthy.
New orders excluding transportation slipped 0.9% last month, after gaining 3.1% in July. Transportation equipment new orders gained 0.2% in August, adding to the 22.3% surge in July. New orders for industrial machinery declined 2.5%, after a 10.4% jump in July. Computers and electronic products new orders decreased 0.3% in August, after a 3.6% surge in July.
Non-defense capital goods new orders climbed 5.9%, and have now gained 34.3% at an annual rate in the last three months, indicating that business investment has turned a corner. Excluding aircraft, non-defense capital goods gained 0.6%, after jumping 7.0% in July, and are up 4.0% at an annual rate in the past six months.
Shipments of durable goods fell 1.3% in August, after rising 3.3% in July, and are up 7.3% at an annual rate in the six months ending in August.
Separately, initial unemployment claims declined 24,000 to 406,000 in the week ending September 21, the second consecutive decline. Despite spending five weeks above 400,000, initial claims have dropped considerably from their peak of 433,000, and should continue to decline in the coming weeks. Continuing claims, rose to 3.678 million in the week of September 14.
Implications: New orders for durable goods fell by much less than expected in August, slipping just 0.6%, after a surprising surge of 8.6% in July. Excluding defense, durable goods new orders climbed 0.6%; while excluding transportation, new orders gained 0.2%. Nondefense capital goods new orders, excluding aircraft, gained 0.6% last month, and are up 4.0% at an annual rate in the past six months. In addition, these ÒcoreÓ orders are now up 0.8% from year-ago levels Ð the first year-over-year gain in twenty months. Durable goods shipments decreased 1.3% in August, but are up 1.2% at an annual rate in the last three months, suggesting that the worst is over for business fixed investment. The most important thing to realize at this juncture, is that normal, monthly volatility in data can cloud the underlying trend. The trend in durable goods orders is definitively positive, and is moving in a different direction than that suggested by some of the purchasing managers surveys. We remain convinced that the economy will grow faster than recently reduced consensus estimates predict.
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