Thursday, February 25, 2010

Durable Goods Orders- 02/25/10

Via Bloomberg:

The durables report has lived up to its reputation as one of the most volatile indicators. Taking into account upward revisions to December numbers, January numbers look decent. At the headline level, new orders for durable goods in January posted a healthy 3.0 percent gain, following a revised 1.9 percent rebound in December. The December increase had previously been estimated to be 0.3 percent. The latest number topped expectations, compared to analysts' forecasts for a 1.5 percent boost. But we have a different picture for January excluding transportation. Excluding the transportation component, new durables orders fell 0.6 percent after a 2.0 percent gain in December. But the ex-transportation component was revised up for December from the original 0.9 percent rise. Overall, the headline number exaggerates strength but the core number is OK for such a volatile series after the upward revision to December.

Transportation spiked 15.6 percent in January after a 1.5 percent rise the month before. For the latest month, non-defense aircraft (mainly Boeing) surged a monthly 126.0 percent; defense aircraft rose 11.6 percent; and motor vehicles slipped 2.2 percent.

Looking at core components, weakness was rather narrow-most components posted gains. The 0.6 percent dip in durables excluding transportation was led by a sharp 9.7 drop in new orders for machinery after a 7.4 percent rise in December. Also slipping in the latest month was the "all other" component. But gains in the core were widespread with computers & electronics up 4.6 percent and communications equipment rising 3.1 percent. Also improving were primary metals, and electrical equipment. Fabricated metals were flat for January.

Year-on-year, overall new orders for durable goods jumped to plus 10.2 percent in January from minus 1.6 percent the prior month. Excluding transportation, new durables orders improved to up 8.6 percent from up 1.5 percent in December.

Unfortunately this data was offset by a spike in initial Jobless claims.

U.S. Futures @ 9:15 EST
DJIA- off -100.00 to 10,255.00
SPX- down more than 1% to 1091.00
NASDAQ 100- 1796.75 down 17.25 points

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

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