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, decreased by 5.2% last month to a seasonally adjusted $163.80 billion, the Commerce Department said Thursday.
In the year to January, orders for durable goods decreased by 26.4% unadjusted.
Excluding the transportation sector, the so-called core rate, orders dropped by 2.5% last month after decreasing by 5.5% in December.
Orders for non-defense capital goods excluding aircraft, a key barometer of business investment, fell by 5.4%, after decreasing 5.8% in December. Year over year, orders were down 20.2%. Shipments for such goods, used by the government in calculating GDP, fell by 6.6% last month after being flat in December.
Economists are estimating that the government will make a sharp downward revision in Q4 2008 GDP, lowering its first estimate to a 5.4% drop from the 3.8% decline first reported. 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.
Motor vehicles and parts decreased by 6.4% for the second straight time last month and were down 34.6% on the year. Orders fell 5.0% for computers and electronics, 2.0% for machinery, 1.1% for fabricated metals, 4.6% for primary metals, and 6.1% for electrical equipment.
Forex Technical Reaction: S&P futures were near their high of the session and the dollar was moving lower against the euro, pound and Australian dollar. Futures declined about 0.50 points after the report while the dollar gained slightly on the higher-yielders and fell vs. the yen.