Durable Goods Orders Decrease 0.1% in August

Sept. 28, 2011
Big drop from 4.1% increase in July

New orders for manufactured durable goods in August decreased $0.2 billion or 0.1% to $201.8 billion, the U.S. Census Bureau announced on Sept. 28.

This decrease, down two of the last three months, followed a 4.1% July increase.

Primary metals, down following five consecutive monthly increases, had the largest decrease, $0.2 billion or 0.8% to $24.2 billion.

"The August report on demand for long-lasting manufactured goods well reflects the mix of uncertainties in the U.S. and global economic climates. A 1.1% increase in new orders for nondefense capital goods, excluding aircraft, a proxy for business equipment spending, suggests that -- while sluggish -- capital spending has been strong enough to keep a troubled U.S. economy from sliding into what could be a difficult and damaging new recession," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI.

"It was especially encouraging to see at least a modest degree of energy in capital investment during a month that featured many assaults on business and consumer confidence, from a debilitating debate on the U.S. debt ceiling to suggestions that the Eurozone sovereign debt quagmire was spinning out of policymakers' control.

"Earlier in this tepid U.S. economic recovery, the manufacturing sector was able to buck the trend of general economic weakness because of a sharp rebound in inventory accumulation and a faster than expected recovery in the growth of the emerging markets that have become increasingly important for U.S. manufacturing profitability," Waldman noted. "But as the inventory swing abates and as global growth slows, the factory sector is facing much the same risks as the rest of the economy, from the burden of housing and labor market difficulties to the threats posed by an increasingly difficult financial and economic crisis in the Eurozone."

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