The headlines say the durable goods new orders improved in February. Our analysis says the opposite. There is no argument, however, that if one excludes aircraft – this is not a good report.
Econintersect Analysis:
- unadjusted new orders growth decelerated 2.6% month-over-month , and isdown 0.4% year-over-year.Â
- the three month rolling average for unadjusted new orders decelerated 3.4% month-over-month, and up 1.0% year-over-year.
Year-over-Year Change of 3 Month Rolling Average – Unadjusted (blue line) and Inflation Adjusted (red line)
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- Inflation adjusted but otherwise unadjusted new orders are down 4.2% year-over-year.
- The February Federal Reserve’s Durable Goods Industrial Production Index growth decelerated 0.9% month-over-month, up 2.8% year-over-year [note that this is a series with moderate backward revision – and it uses production as a pulse point (not new orders or shipments)] – three month trend is decelerating.
Comparing Seasonally Adjusted Durable Goods Shipments (blue line) to Industrial Production Durable Goods (red line)
- unadjusted backlog (unfilled orders) growth decelerated 0.9% month-over-month, up 6.0% year-over-year.
- according to the seasonally adjusted data, aircraft (civilian and military) were the main reason for the “strength” this month (big difference between the adjusted and the unadjusted data) – but almost all other sectors were weak.
- note this is labelled as an advance report – however, backward revisions historically are relatively slight.
Census Headlines:
- new orders up 2.2% month-over-month.
- backlog (unfilled orders) was up 0.3% month-over-month – and remains at a historical high.
- the market expected new orders at -1.5% to 2.5% month-over-month (consensus 1.0%) versus the 2.2% actual
Durable Goods sector is the portion of the economy which provides products which have a utility over long periods of time before needing repurchase – like cars, refrigerators and planes.
