New Orders for Durable Goods Drop 4.3%
New orders for durable goods fell 4.3% to $229.3 billion for December, according to a Commerce Department report (link opens as PDF) released today. The weakness was led by a big 17.5% drop in the volatile category of commercial aircraft.
After increasing a revised 2.6% for November, this latest report comes as an unpleasant surprise. Overall, analysts had predicted a 1.6% increase in new orders for December. Durable goods are items meant to last at least three years, and investors keep a close watch on new orders to gauge businesses' longer-term confidence in the economy. Some of the December weakness probably reflected a temporary dip following November's jump, which had been driven by businesses rushing to take advantage of expiring tax breaks.
Excluding volatile transportation orders (which include aircraft), December's numbers don't look much better. Analyst expectations called for a 0.7% rise, but actual new orders tapered off into the red with a 1.6% dip.
Orders for primary metals such as steel fell 2.1% while demand for computers and other electronic products dropped 7.8%. Orders for machinery rose 0.8%.
Despite the new orders decrease, unfilled orders continued to advance with a 0.4% increase, while inventories expanded 0.8% to $387.8 billion, the highest level since data were first recorded in 1992. After increasing 1.3% in November, shipments fell 1.9%.
-- Material from The Associated Press was used in this report.
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