Durable goods orders down - 2nd straight month of decline reported
Durable goods orders down - 2nd straight month of decline reported
Copyright © 2006, Chicago Tribune and Bloomberg News
Published September 28, 2006
WASHINGTON -- The Commerce Department said Wednesday that durable goods orders unexpectedly fell in August, signaling companies might be scaling back investment plans as the economy slows.
The 0.5 percent drop followed a 2.7 percent drop in July, the first back-to-back decreases since April-May 2004.
Economists expected a 0.5 percent increase last month. Excluding transportation equipment, orders slumped 2 percent, the largest decline since July 2005.
Concerns that consumer spending will falter as the housing market sags could be making companies reluctant to buy new equipment or boost inventories. The figures suggest the real estate slump is spreading to other areas of the economy.
"The run of reports showing sluggish growth in the economy continues," said Michael Gregory, senior economist at BMO Capital Markets in Toronto.
Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 0.3 percent last month. Computers and electronics bookings slid 4.7 percent, and orders for machinery declined 2.1 percent. Orders for electrical equipment and appliances slumped 9.2 percent, the biggest decrease since 2002.
Automobile bookings rose 4.4 percent in August, but that might not be repeated in coming months.
Ford Motor Co. is cutting North American production by 16 percent in the second half of the year, while General Motors Corp. plans to trim fourth-quarter production 12 percent. DaimlerChrysler AG's Chrysler unit will cut second-half production as much as 17 percent.
"The auto sector is the weak link in American manufacturing," Gregory said. "Lower production at automakers is a drag on the overall factory sector."
Orders for commercial aircraft tumbled 22 percent last month, after dropping 13 percent in July. Chicago-based Boeing Co. said it received 30 aircraft orders in August, down from the 38 placed the previous month.
Reports this month on manufacturing have sent conflicting signals.
Manufacturing in New York state expanded at a faster pace this month, but a separate report showed manufacturing in the Philadelphia area unexpectedly contracted this month for the first time since April 2003.
The disparity might be due to differences in the mix of industries, said Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York.
The Philadelphia area has more construction-related industries that could be suffering from the downturn in housing, while New York has more producers of the goods businesses are buying to improve efficiency, he said in a report.
Copyright © 2006, Chicago Tribune and Bloomberg News
Published September 28, 2006
WASHINGTON -- The Commerce Department said Wednesday that durable goods orders unexpectedly fell in August, signaling companies might be scaling back investment plans as the economy slows.
The 0.5 percent drop followed a 2.7 percent drop in July, the first back-to-back decreases since April-May 2004.
Economists expected a 0.5 percent increase last month. Excluding transportation equipment, orders slumped 2 percent, the largest decline since July 2005.
Concerns that consumer spending will falter as the housing market sags could be making companies reluctant to buy new equipment or boost inventories. The figures suggest the real estate slump is spreading to other areas of the economy.
"The run of reports showing sluggish growth in the economy continues," said Michael Gregory, senior economist at BMO Capital Markets in Toronto.
Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 0.3 percent last month. Computers and electronics bookings slid 4.7 percent, and orders for machinery declined 2.1 percent. Orders for electrical equipment and appliances slumped 9.2 percent, the biggest decrease since 2002.
Automobile bookings rose 4.4 percent in August, but that might not be repeated in coming months.
Ford Motor Co. is cutting North American production by 16 percent in the second half of the year, while General Motors Corp. plans to trim fourth-quarter production 12 percent. DaimlerChrysler AG's Chrysler unit will cut second-half production as much as 17 percent.
"The auto sector is the weak link in American manufacturing," Gregory said. "Lower production at automakers is a drag on the overall factory sector."
Orders for commercial aircraft tumbled 22 percent last month, after dropping 13 percent in July. Chicago-based Boeing Co. said it received 30 aircraft orders in August, down from the 38 placed the previous month.
Reports this month on manufacturing have sent conflicting signals.
Manufacturing in New York state expanded at a faster pace this month, but a separate report showed manufacturing in the Philadelphia area unexpectedly contracted this month for the first time since April 2003.
The disparity might be due to differences in the mix of industries, said Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York.
The Philadelphia area has more construction-related industries that could be suffering from the downturn in housing, while New York has more producers of the goods businesses are buying to improve efficiency, he said in a report.
posted by Carlos T Mock @ 9:25 AM
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