Durable Goods Orders Increase 5.2%

Second monthly increase

New orders for manufactured durable goods in December increased $11.2 billion or 5.2% to $226.6 billion, the U.S. Census Bureau announced on Jan. 29. It was the second consecutive monthly increase and followed 0.5% November increase.

Excluding transportation, new orders increased 2.6%. Excluding defense, new orders increased 2.9%.

"Multiyear orders for defense and aerospace goods spiked in December but the more reliable indicator of capital equipment activity, nondefense capital goods excluding aircraft, also surged 4.4%. An outpouring of orders in the industrial sector is certainly a welcome relief after all the negative news of late. It does not indicate, however, that all is well.

"Nondefense capital goods orders excluding aircraft declined 3% in October, and fell 0.2% in November. The December rebound means that the equipment industry is oscillating up and down around a flat trend. Capital equipment stocks are neither overbuilt nor in need of addition. For the year 2007 as a whole, total new orders for durable goods were only up 1% and nondefense capital goods excluding aircraft order fell 1.5%," said Daniel J. Meckstroth, Chief Economist, Manufacturers Alliance/MAPI.

Inventories of manufactured durable goods in December, up five of the last six months, increased $3.5 billion or 1.1 to $320.7 billion.

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