Durable Orders Decline Carries a Silver Lining

Notwithstanding the headline that durable orders declined 1.1% in May (consensus -1.3%), there were some encouraging markers for the economy in the report. Specifically, orders for nondefense capital goods, excluding aircraft, increased 2.1% versus a 2.7% decline in the prior month. This is a good indication that businesses are not recoiling with spending plans in the face of some unnerving macro headlines.

Business investment activity might be uneven, but it is certainly not dead. To wit, orders for nondefense capital goods, excluding aircraft, are up 15.5% year-over-year.

The overall decline in orders for May was a function of a drop in orders for Boeing aircraft that followed a healthy increase in April. According to the Census Bureau, new orders for nondefense aircraft and parts dropped 29.6% in May after a 215.7% increase in April.

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- Posted: 2010-06-24 09:29:41

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