Durable goods fall 2.9% in April

[UpInArms]

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38133.3566666667-814757989&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- New orders for goods that last more than three years fell in April at the fastest pace in a year and half, the Commerce Department said Wednesday. New orders for durable goods fell 2.9 percent in the month after two consecutive monthly gains. Orders for durable goods, excluding transportation, fell 2.1 percent in the month, the first drop in five months. Orders for durable goods, excluding defense, fell 2.4 percent in the month, the first decline in three months. Inventories of durable goods rose 0.5 percent in April, the fifth consecutive monthly increase.

...a bit more...

[4dsc]

1. Lets see

Orders are falling, inventories are rising, and the economy is EXPANDING??? Something doesn't bode well here..

[Frodo]

2. It was largely expected.

That number fluctuates wildly. Expectations were for it to drop after two unusually strong months (in fact - last month was revised even stronger)

The chart below will probably update in a few minutes, but give you an idea




Last month was expected to be .7% but came in over 3% and just got revised to 5.7%


Translation? They can't call this number to save their lives. It "surprises" almost every month. They "year-on-year" change is more significant

[mhr]

3. But, But Frodo Promised That All Would be Well With The Economy

His charts would not lie.

We were all on the road to riches, streets paved with gold, happy days here again!

How can this be?

[Frodo]

5. All is fine.

Nothing to see here...

move along...


:-)

[JM]

4. Two words: Oil & Inflation

Housing starts dropped based on increases in mortgage rates, refis are down, and people are spending more to fill up their SUVs. Any guesses what next month's durable goods orders will be? The month after that?

I am assuming of course that the durable goods numbers exclude auto sales. I am also assuming we should see a boom in the number of non-SUV auto purchases during the next 6 months.

JM

[Barkley]

6. Good Points!

If mortgage rates are slowing housing starts and purchases, then durables would fall; buying a new house often entails putting new things in them like washers, dryers and other durable goods.

The fall in durable goods is often linked to the start of recessions because its represents a decline in discretionary spending on the part of consumers and businesses. When business is good your company might buy a new photo copier instead of paying to repair the old one.

But if the economic outlook is not good your company might keep the old copier and rely on repairs. The same ideas hold for cars, washers, dryers etc.

Another issue is the value of the dollar. A stronger dollar would encourage consumers to buy durables from overseas producers instead of US producers, which could cause rising inventories of US producers.

Of course the opposite is true if the dollar value is falling.