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Durable Goods Orders Decreased 4.9% in August

Manufacturers Alliance/MAPI says big ticket items will expand at moderate pace

New orders for manufactured durable goods in August decreased $11.3 billion or 4.9% to $219.5 billion, the U.S. Census Bureau announced Sept. 26. This decrease followed two consecutive monthly increases, including a 6.1% July increase.

Excluding transportation, new orders decreased 1.8%. Ecluding defense, new orders decreased 5.9%. Transportation equipment, down following two consecutive monthly increases, had the largest decrease, $8.5 billion or 11.2% to $67.5 billion. This was due to nondefense aircraft and parts, which decreased $9.0 billion.

"In spite of mounting headwinds to the national and global economic outlooks, the August durables goods report suggests that demand for big-ticket items will continue to expand at a moderate pace," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI. "While new orders for long-lasting goods fell by nearly 5% after an unsustainable 6% gain in July, the bulk of the decline came from a significant drop in the very volatile commercial aircraft sector.

"The report does, however, suggest that business equipment spending will remain sluggish, partially due to mounting uncertainties on the state of the economy caused by the protracted and deep slump in the housing sector as well as the liquidity crisis that has roiled financial markets in recent weeks," he added. "While moderate manufacturing growth should continue, housing and financial market concerns present considerable downside risks to the short-term outlook for the factory sector."

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