U.S. Durable Goods Orders Fall for Third Month

New orders, as well as transportation equipment orders, have been down four of the past five months.

New durable goods orders fell 2.5% to $191 billion, following a 0.1% slip in November, the Commerce Department said on Jan. 27.

The December decline in orders for big-ticket goods -- such as planes, computers and cars -- was steeper than the 1.5%t drop forecast by most analysts.

Excluding transportation, new orders increased 0.5%.

New orders, as well as transportation equipment orders, have been down four of the past five months.

In December, transportation orders had by far the largest drop, down $5.8 billion, or 12.8%, to $39.2 billion. Most of that was due to orders for nondefense aircraft and parts, which plunged $5 billion.

Despite the late-year slide, new orders for durable goods for the full-year 2010 rose 13.6% compared with 2009,

"The December report presented evidence of slowing in both U.S. business investment and manufacturing activity," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI. " Demand in primary and fabricated metals, key early supply chain industries, experienced significant declines, albeit from strong activity in November. Machinery demand, however, closed out 2010 on a strong note.

"Recent signs of stronger consumer demand are encouraging for U.S. economic growth prospects but significant risks remain in labor markets, housing, and state and local finances. The global economic recovery continues to be a positive for U.S. factory sector prospects. But world growth is imbalanced with strong activity in emerging market nations providing a stark contrast to the weak and uncertain rebound in the advanced economies, a pattern that may well persist for an extended period of time. All told, 2011 should be year of solid but slower output gains in U.S. manufacturing as growth in capital spending and export demand, the two key drivers of industrial activity, moderate."

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