Durable goods orders, some good news (my BOLD):
05/23 08:30
U.S. April Durables Orders Rise 1.1%; Ex-Transportation Up 2.9%
By Carlos Torres
Washington, May 23 (Bloomberg) -- U.S. orders for durable goods rose in April for a fifth straight month, reflecting increased demand for autos, machinery and appliances, government figures showed.
The 1.1 percent increase in orders for big-ticket goods to $176.6 billion followed a revised 0.2 percent rise the previous month, the Commerce Department said. The total no longer includes orders for semiconductors after Intel Corp. and other chipmakers stopped taking part in the voluntary government survey.
Sales at automobile dealers and department stores surged last month, boosted by discounts and incentives. That's left manufacturers such as General Motors Corp. short on inventories and helps explain why production plans are being stepped up. Orders for business equipment increased for the second month in the last three, the government's report showed.
``Manufacturing has found a toehold and will continue to expand,'' said Jeoff Hall, an economist at Thomson Financial IFR in Boston, before the report. ``We will see businesses increase outlays on products and equipment'' as profits rebound along with the economy.
Orders excluding transportation equipment jumped 2.9 percent last month, the largest increase in six months, after rising a revised 0.8 percent in March.
Analysts had expected April durable goods orders to rise 0.5 percent to $174.3 billion after a previously reported decrease of 0.5 percent in March, based on the median of 60 forecasts in a Bloomberg News survey. They also expected a 1 percent rise in bookings excluding transportation equipment after a previously reported 0.1 percent drop. Durable goods are products such as computers, airplanes and cars made to last three or more years.
Inventories, Shipments
The report also showed inventories of durable goods fell 0.3 percent last month. Shipments rose 3.5 percent.
Retail sales rose 1.2 percent last month, the biggest increase since October, led by purchases of cars, clothing and building materials, the government reported last week.
The larger-than-expected increase in sales came after businesses cut inventories at a $36.2 billion annual pace in the first three months of the year, the fifth straight quarterly decrease, following a record $119.3 billion reduction in the fourth quarter of 2001.
The slower pace of inventory reduction helped the economy grow at a 5.8 percent annual pace from January to March, the strongest in two years, after expanding at a 1.7 percent rate in the last three months of 2001.
Business Investment
While adjustments to inventories are giving the economy an initial leg up, a pickup in business spending on equipment and software is needed to keep the recovery on track, economists said. There are some signs that business investment is starting to improve.
Today's report showed orders for non-defense capital goods, including a decline in aircraft, rose 1.9 percent in April after falling 3.1 percent in March and rising 4.6 percent in February.
Bookings for aircraft and parts fell 37.1 percent in April after rising 6.4 percent the previous month. While Boeing Co., the world's biggest airplane maker, said it received 33 aircraft orders last month, up from 14 in March, the government's figures don't always track industry data. Non-defense capital goods shipments fell 0.1 percent.
Today's report also showed orders for automobiles and parts surged 12 percent in April, the biggest increase since August 1998, following a 1.2 percent decrease the previous month. The increase has prompted some manufacturers to increase production.
Auto Production
General Motors, the largest automaker, said this month it will add a third shift at a Michigan factory to increase pickup truck capacity by 100,000 a year. John Devine, the company's vice chairman, said last month that dealer inventories of pickups, sport-utilities and some sedans were too low and that the company was looking for ways to increase production.
Orders for appliances and other electrical equipment rose 7.6 percent in April after falling 2 percent.
Machinery orders increased 4 percent last month after falling 1.5 percent in March. Orders for computers and electronic products rose 2.5 percent last month, the biggest rise in six months, after increasing 0.5 percent. Communications equipment orders jumped 12 percent last month.
Applied Materials Inc., the world's biggest maker of semiconductor-manufacturing tools, said last week orders in the second quarter increased by 51 percent from the previous three months and by 25 percent from the same period last year. The company said it expects orders in the current period to rise 10 percent to 15 percent from the second quarter.
Semiconductors
About 21 customers that include Intel Corp., the world's biggest chipmaker, placed orders of more than $10 million each in the second quarter, up from 11 companies in the first quarter, Applied Materials said. One order exceeded $100 million, the company said without identifying the client.
The semiconductor equipment book-to-bill ratio, a measure of demand, rose to 1.20 last month, the Semiconductor Equipment and Materials International said last week. That means that North American makers of equipment to manufacture chips received $120 worth of new orders for every $100 of products shipped, a sign the market is expanding.
That indicates April orders for durable goods may have been higher had semiconductors been included. Statistics show chips accounted for as much as 4 percent of all orders.
``We are now clearly in the first phase of a recovery that's being driven by consumer demand,'' said James Morgan, chief executive officer at Applied Materials, in an interview last week. ``This is an uplift that's just beginning worldwide.''
Orders for defense capital goods fell 33.3 percent last month after increasing 22.4 percent in March. |
