New orders for manufactured durable goods in January decreased $9 billion or 5.2% to $163.8 billion, the U.S. Census Bureau announced on Feb. 26. This was the sixth consecutive monthly decrease and followed a 4.6% December decrease.
Excluding transportation, new orders decreased 2.5%. Excluding defense, new orders decreased 2.3%.
"New orders are 26% below the level of one year ago," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "Orders declined across most of the equipment and long-lived materials industries. A good indicator of business equipment activity is nondefense capital goods orders excluding aerospace. These less volatile equipment orders declined 5.4% in January and were 20% below the year ago level.
"The report confirms what is already very evident, and that is that the U.S. economy is it the midst of a severe recession. Inventories are being slashed across the manufacturing sector so material deliveries are restrained in order to draw down work-in-process materials. Rising excess factory capacity and rising unemployment in the nonmanufacturing sector show that existing resources are underutilized, depressing the need for new equipment.
"In this very painful process of readjustment the main virtue is patience. Fiscal and monetary stimulus, falling prices, deleveraging, and the rebuilding of pent-up demand will eventually get the economy on a growth track againhopefully later this year."