February 26, 2006
Not to worry about the January durable goods figures
There are things you may fret about, but the most recent statistics on durable goods orders shouldn't be one of them.
Orders to U.S. factories for big-ticket manufactured goods fell by the largest amount in 5-1/2 years in January as demand for commercial aircraft suffered the biggest setback in seven years, the government reported Friday. The Commerce Department said that orders for durable goods, everything from computers to cars, fell by 10.2 percent last month, a much bigger decline than had been expected. The weakness was led by a [seasonally adjusted] 68.2 percent drop in orders for commercial aircraft reflecting a falloff in sales at Boeing Corp. (BA) after two very strong months. Analysts said the overall decline overstated the weakness in manufacturing because it was so heavily influenced by the volatile aircraft sector.
The above graph puts those aircraft figures in perspective. The phenomenon driving the December-to-January drop was not a low level for January (which was about the median value for 2005) but rather unusually high levels in November and December. Excluding transportation, seasonally adjusted new durable goods orders would have shown a 0.6% rise rather than a 10.2% drop in January.
Posted by James Hamilton at February 26, 2006 11:50 AMdigg this | reddit
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Tracked on March 5, 2006 01:01 PM
Why do nearly all news stories about these matters neglect to state whether the quoted growth/decline rate is year-over-year or month-to-month, and if the latter, whether the rate is annualized? (And if the figure is year-over-year, whether it's real or inflation-adjusted.)
Posted by: jm at February 27, 2006 06:35 AM
Good point, JM. The figures referred to in the Fox News story are month-month changes, quoted at monthly rate, in nominal terms and seasonally adjusted.
Posted by: JDH at February 27, 2006 08:11 AM