Durable goods orders slip in October
Stage now set for slow industrial recovery
Tom Stundza -- Purchasing, 11/25/2009 11:28:09 AM
Buyer surveys indicating reduced purchasing of durable goods this autumn have proved accurate since government data now shows orders to manufacturers fell 0.6% in October. Reason: Non-defense capital goods orders, ex-aircraft showed the largest drop at 2.9% since April, offsetting the entire gain posted in September and raising concerns about future business spending.
The consensus of economists, which had downplayed buyers' surveys, had expected a 0.5% gain. Now, Tim Quinlan, economic analyst at Wells Fargo Securities says "it's starting to look like businesses may have finished right-sizing their inventories to the new, weaker demand environment." He says the October data "sets the stage for slow recovery in production" in coming winter months.
Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI trade association says "material industries like steel and fabricated metal products benefited from an inventory-induced rebound while much of the capital equipment industries posted a sharp decline in October orders."
He adds that the report on durable goods "confirms the tenor of the October industrial production report released last week by the Federal Reserve, that the industrial expansion has flattened out after an aggressive rebound from July to September that was narrowly led by government stimulus and inventory swings," he added.
"While we are convinced that the industrial recession has ended, the chance of a vigorous recovery is remote," Meckstroth says in a statement to the media. "Capital goods industries are impaired by excess capacity and accelerating declines in nonresidential construction. The industrial recovery will likely be relatively slow and punctuated by fits of growth and decline."
Durable goods orders rose almost 5% in July
08/25/2009Durable-goods orders climbed 1%
10/27/2009Durable goods orders fall in August
02/09/2010Durable goods orders improved in November
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