Durable Goods Orders Signal Recession Losing Some Momentum

Daily Forex Fundamentals | Written by Wachovia Corporation | May 28 09 13:35 GMT |

Durable goods orders at U.S. manufacturers increased 1.9 percent in April but the March decline in orders was revised downward. The net change for the two month period is slightly negative. Non-defense capital goods orders, ex-aircraft slipped 1.5 percent. We do not expect to see lasting resurgence in business spending until 2010. Orders Jumped, but the Revision Made it Roughly a Wash While the March revision takes the shine off the jump in April, the developing trend signals this recession – the longest and deepest in the post-War era—is losing momentum. One not-so-bright spot is nondefense capital goods orders, ex-aircraft. Last month's gain was revised to a decline of 1.4 percent, and this month posted a loss of another 1.5 percent. This suggests continued weakness in business spending. Less Work in the Pipeline, but Stockpiles Still Shrinking The pace of decline is slowing in unfilled orders for nondefense capital goods ex-aircraft. This tells us the freeze in spending at the height of the financial crisis last fall has abated. This news is encouraging as a bottom in the series is commonly associated with the peak in layoffs at large manufacturers. Slowing declines are seen in the sub-components as well. Computer & electronics are even approaching positive territory. Wachovia Corporation http://www.wachovia.com Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.