Join        Login             Stock Quote

US Durable Goods Still Strong

 March 29, 2012 02:58 PM

February's durable goods orders missed estimates, rising 2.2% over January versus expectations of 3.0%. Core capital goods, excluding volatile transportation and defense orders, also missed estimates, rising 1.2% versus estimates of 1.4%.

That may not seem terrific, but a closer inspection tells a different story—with core capital goods orders set to hit all-time highs. Most of February's miss was due to an upward revision in January's number—from -4.0% over December to -3.6% m/m. Core capital goods were also revised upward from -4.5% to -3.7% m/m. Again, January's negative read may not seem great, but it was likely due to some near-term distortions. Thanks to the 2011 year-end expiration of tax rules allowing accelerated depreciation of capital goods, it appears likely there was some pull forward into the end of last year—pumping up year-end numbers at January's expense.

[Related -Savings Glut and Financial Imbalances]

Month to month readings of any economic metric can be volatile and prone to unexpected distortions. Taking a longer view, it becomes clear durable goods orders remain strong. Exhibit 1 shows despite a recent deceleration, core capital good orders remain at the same healthy levels seen throughout most of the last bull market.

Exhibit 1: New Orders for Non-Defense Capital Goods Ex-Aircrafts (Core Capital Goods)

Source: Thomson Reuters, US Commerce Department.

[Related -A Dividend Aristocrat Is Now On Sale]

Further, Exhibit 2 shows capital goods orders have rebounded strongly off their 2009 lows, bouncing back to previous highs twice as fast as the last economic expansion. It seems the pace of growth in durable goods orders is returning to levels somewhat similar to the last economic expansion. However, the absolute growth appears set to break all-time highs and remain a bright spot for the US economy.

Exhibit 2: Growth in Core Capital Goods Orders (Ex-Aircraft and Defense)

Source: Thomson Reuters, US Commerce Department.

source: Market Minder
Disclaimer: This article reflects personal viewpoints of the author and is not a description of advisory services by Fisher Investments or performance of its clients. Such viewpoints may change at any time without notice. Nothin herein constitutes investment advice or a recommendation to buy or sell any security ot that any security, portfolio, transaction or strategy is suitable for any specific person. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageSavings Glut and Financial Imbalances

Martin Wolf in today's Financial Times discusses the reasons for low interest rates and suggests some read on...

article imageA Dividend Aristocrat Is Now On Sale

The bear market investors have been dreading is already here for many individual stocks. While the S&P 500 read on...

article imageTwo Picks to Play Defense in a Slowing Economy

Is the economy slowing? Last Thursday the Institute for Supply Management (ISM) reported that its read on...

article imageUS Jobless Claims Fall, Moving Closer To Multi-Decade Low… Again

US jobless claims continue to cast a positive glow on the outlook for the labor market. Today’s weekly read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Two Picks to Play Defense in a Slowing Economy
More Articles on: Finance

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.