Durable goods orders for the month of January fell 5.2 percent. It was the sixth straight monthly decline, and provides evidence that the slowdown in business spending at the end of last year picked up steam going into 2009. Businesses are cutting back drastically to survive the recession.
Orders Very Weak, Business Spending Down
- Declining for a record sixth consecutive month, durable goods orders were led lower by significant declines in defense spending and computer & electronics orders.
- The key measure of business spending, nondefense capital goods orders ex-aircraft, fell 5.4 percent in December. We do not expect business spending to add to GDP until late 2010.
Inventories Finally Declined
- After inventories piled higher for 16 straight months, we finally saw a drawdown in January. If this continues, we could see the pace of decline in orders diminish.
- As global growth turned negative late last year exports began to pull back. The collapse in shipments of primary metals reflects, at least in part, this trend. Falling metals prices also factored in.
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