Release Explanation: The value of new purchase orders placed with manufacturers that have a life span of more than three years. These can include; aircraft, household appliances, computers and automobiles. Builds an economic picture of how busy the manufacturing industry will be over the coming months and is considered a leading indicator. Affects Retail Sales, CPI and GDP. A currency will be affected eventually by the consequences of these numbers, not always straight away.
Trade Desk Thoughts: Orders for Durable Goods, those designed to last three years or longer, increased by $5.5 billion or 3.4% last month to a seasonally adjusted to $165.6 billion, the Census Bureau said Thursday. It was the first increase in seven months. Economists had expected to see orders decline by 2.3%.
Tempering the report was that January's numbers for durables and core durables were revised sharply lower.
Excluding the transportation sector, the so-called core rate, orders increased by 3.9% last month after decreasing by 5.5% in December.
In the year to February, durable orders declined by 28.4%.
Orders for non-defense capital goods excluding aircraft, a key barometer of business investment, rose by 6.6%, after plunging a downwardly revised 11.3% in January, originally reported as just a 5.4% decline. Year over year, orders were down 23.8%.
February shipments for non-defense capital goods excluding aircraft rose by 0.6%, after dropping 8.9% in January. The shipment numbers are used by the government when calculating gross domestic product.
The National Association of Business Economics expects GDP will contract the first half of 2009, with the economy growing in the second half. NABE forecasters see a 5.0% drop in the first quarter, a 1.7% decline in the second quarter, and 1.6% growth in the second half of the year.
Companies are adjusting inventories to retreating demand and have put off plans to upgrade and spend on capital equipment. Wednesday's data showed manufacturers' durable goods inventories in February decreased a second straight month, sliding 0.9%.
Within the durables data, unfilled orders are a sign of future demand. That category decreased in February a fifth month in a row, falling 1.3%, an indication the economy will restrain the factory sector in coming months.
Demand for durables in the beleaguered transportation sector rose 2.0% last month but fell 11.9% in January and was down 43.3% on the year. Orders for commercial planes in February fell 28.9%. Military aircraft orders rose 32.4%. Motor vehicles and parts decreased by 0.6%.
Orders rose 5.6% for computers and electronics, 13.5% for machinery, 1.5% for fabricated metals, and 1.6% for electrical equipment. Orders fell 0.6% for primary metals.
February capital goods orders increased by 11.0%. Non-defense capital goods, items meant to last 10 years or longer, rose by 7.4%.
Forex Technical Reaction: S&P futures were recently trading about 2 points higher prior to the report and the dollar has been relatively flat against most of the majors except the pound, which declined to $1.4550 overnight after a failed auction of U.K. debt. S&P futures rose about 1.75 points after the report and the dollar weakened slightly against the higher-yielders.