Tuesday, February 27, 2007

Durables Goods Orders Drop

From Bloomberg:

Durable-goods orders fell 7.8 percent in January, reflecting the biggest slide in business equipment demand in three years, the Commerce Department said in Washington. At the same time, the Conference Board's consumer-optimism index unexpectedly increased to the highest level in more than five years, and the National Association of Realtors said existing- home sales rose more than forecast.

Durable-goods orders excluding transportation equipment dropped 3.1 percent, the most since July 2005. Excluding military equipment, orders fell a record 7.8 percent last month, while inventories of all durables rose 0.3 percent.

Reluctance to Invest

The figures suggest reluctance among companies to invest carried into 2007 after spending on equipment such as computers, machines and communications gear fell by the most in four years in the fourth quarter. Bloated stockpiles at auto dealers and construction-equipment makers may restrain production early this year, Bernanke told Congress this month.

These numbers are great cause for concern. Industrial production decreased .5% last month. Now we have a drop in durable goods orders, further indicating a manufacturing slowdown. The ISM number -- which comes out later this week -- has hovered around 50, which indicates contraction. The Fed surveys have been mixed this month.