Updated: 28-May-09 09:07 ET

April Durable Orders

Updated: 28-May-09 09:07 ET

Highlights

• Durable goods new orders for April rose a surprisingly strong 1.9%.  It is just one month of data in a very volatile series and March orders fell 2.1%, so not too much should be made of this report, but it is a positive for the economic outlook.
• The gain was due to strong jumps in transportation and defense orders which prove temporary.
• Transportation orders popped a surprising 5.4%.  Defense orders were up 23.2%.  Excluding both defense and transportation, orders were down 1.0%.  Excluding just transportation, orders were up 0.8%.

Key Factors

• A reversal in defense and transportation orders next month could lead to a decline in overall orders, but the overall picture is still one of approaching stability rather than the free fall of the fourth and first quarters.

Big Picture

• Durable goods orders trends were very weak in late 2008 and early 2009.  This reflects the collapse of confidence in the business sector and poor credit market conditions.  The rate of decline should ease and orders might stabilize in mid or late 2009, but the outlook has to be described as grim.  Overseas demand is particularly weak and exports are plunging.  The business sector is in a deep slump.