ethics
06-24-2005, 11:09 AM
U.S. durable goods orders jumped 5.5% in May, their largest rise since March 2004, reflecting a bulge in orders for civilian aircraft. Excluding the 21.2% rise in transportation orders, durable goods orders fell 0.2%, modestly below expectations. May’s durable goods report suggests general softness in orders outside the transportation sector and points toward modest growth in business investment spending on the near-term horizon.
The surge in transportation orders in May reflects orders for 200 aircraft from Boeing, up from 14 aircraft in April; orders for motor vehicles also rose 0.2%. Aircraft orders traditionally have been “lumpy”, and have been a primary source of the significant volatility in the monthly durable goods orders report, and the surge in May eventually will be reversed.
The decline in non-transportation durable goods orders was the second consecutive monthly decline (they fell 0.7% in April). Defense capital goods rose 13.8%, largely retracing their 17% rise in April.
Nondefense capital goods orders excluding transportation, an indicator of capital spending trends, fell 2.3% following their 1.7% rise in April. This May decline points toward continued soft growth in business investment spending. Year-to-date, capital spending growth has been significantly slower than in 2004, likely reflecting the elimination of the tax advantages of accelerated depreciation.
The durable goods report also indicated that inventories rose 0.3%, after being unchanged in April and up 0.6% in March. Shipments were soft, dipping 0.2% following their 1.4% rise in April. Unfilled orders jumped 1.9% following their 0.1% decline in April, but all of this monthly volatility occurred in
the transportation sector; excluding transportation, unfilled orders were flat in May following a 0.1% rise in April and a 0.8% rise in March.
--Mickey. Levy, B of A.
Full report attached.
The surge in transportation orders in May reflects orders for 200 aircraft from Boeing, up from 14 aircraft in April; orders for motor vehicles also rose 0.2%. Aircraft orders traditionally have been “lumpy”, and have been a primary source of the significant volatility in the monthly durable goods orders report, and the surge in May eventually will be reversed.
The decline in non-transportation durable goods orders was the second consecutive monthly decline (they fell 0.7% in April). Defense capital goods rose 13.8%, largely retracing their 17% rise in April.
Nondefense capital goods orders excluding transportation, an indicator of capital spending trends, fell 2.3% following their 1.7% rise in April. This May decline points toward continued soft growth in business investment spending. Year-to-date, capital spending growth has been significantly slower than in 2004, likely reflecting the elimination of the tax advantages of accelerated depreciation.
The durable goods report also indicated that inventories rose 0.3%, after being unchanged in April and up 0.6% in March. Shipments were soft, dipping 0.2% following their 1.4% rise in April. Unfilled orders jumped 1.9% following their 0.1% decline in April, but all of this monthly volatility occurred in
the transportation sector; excluding transportation, unfilled orders were flat in May following a 0.1% rise in April and a 0.8% rise in March.
--Mickey. Levy, B of A.
Full report attached.