US durable goods orders fall in June - Demand for transportation equipment sinks

US durable goods orders fall in June - Demand for transportation equipment sinks
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: July 29 2009 14:44 | Last updated: July 29 2009 15:33
http://www.ft.com/cms/s/0/6e2a5a34-7c45-11de-a7bf-00144feabdc0.html


New orders for durable goods declined in June, as demand for transportation equipment and aircraft plunged, the commerce department said on Wednesday.

US durable goods orders fell by 2.5 per cent to $158.6bn, worse than economists’ expected, ending two-month stretch of rising orders. Compared with a year ago, orders were off by 26.7 per cent.

In spite of the overall decline, analysts took hope from the fact that excluding transportation orders, which are considered to be volatile, new orders actually climbed by a better-than-expected 1.1 per cent last month. This followed a revised rise of 1.3 per cent in May.

“This report reinforces the picture painted by recent ISM reports of the manufacturing sector showing signs of stabilisation,” noted John Ryding and Conrad DeQuadros, economists at RDQ Economics.

The US manufacturing sector has been under severe pressure in the last year as global demand has dried up. Analysts have been looking for a rise in orders for durable goods as a signal that companies could be ready to increase their production and capital spending.

“We are hardly out of the woods for business fixed investment,” said Mike Englund, an economist at Action Economics.

From May to June orders increased for primary metals, machinery and electrical equipment. Companies cut back on orders for fabricated metal, communications equipment and computers.

Transportation orders plunged by 12.8 per cent in June and capital goods were down by 8 per cent.

Meanwhile, companies continued to clear their stocks. Inventories for manufactured durable goods fell for the sixth consecutive month, dropping by 0.9 per cent to $318.8bn.