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[milbank]

For all the fo de rah regarding this ibank bailout, the issues on Main St. are not being addressed and are still deteriating.


Orders for durable-goods down 4.5%

Capital spending is weaker than expected as outlook grows grimmer

By Greg Robb, MarketWatch
Last Update: 9:16 AM ET 9/25/08

WASHINGTON (MarketWatch) -- New orders for U.S.-made capital goods decreased in August by the largest amount since the beginning of the year, signaling that businesses may be getting more cautious in their outlook.

New orders for durable goods fell 4.5% in August, pushed lower by weak demand across the board, the Commerce Department reported Thursday.

Economists surveyed by MarketWatch were looking for durable goods orders to fall 2% in August. See Economic Calendar.

Orders in July were revised to a 0.8% gain, compared with a 0.7% estimate previously.

Durable goods are big-ticket items designed to last three years or more. As such, new orders are very sensitive to economic expectations and serve as useful leading indicators of growth.

Demand in August was held back by a 38.1% drop in orders for civilian airplanes. But even without the extremely volatile transportation category, orders were down 3% in August, the biggest drop in 19 months. Read full report.

Orders for core capital-equipment goods -- the best monthly gauge of business investment -- fell 7.5% after a 3.5% gain in July. This is the biggest drop in a year.

The report lends support to other indicators showing weakening economic activity, especially the August unemployment report.

Shipments of durable goods fell 3.5% following a 0.1% gain in July. It was the biggest drop in shipments since April 2001.

Shipments of core capital equipment -- which are factored directly into calculations of gross domestic product -- decreased 1.4% in August.

Inventories rose 0.7% in August.

Unfilled orders -- a sign of future production -- rose 0.4%.

In a separate report, the Labor Department said first-time claims for unemployment benefits spiked by 32,000 to 493,000 last week as people in the hurricane-hit states of Louisiana and Texas filed for benefits. See full story.

Details of durables report

Demand was weak across industrial categories, with only strong demand for computers, telephones and defense goods.

Orders for primary metals plunged 9.3%, the biggest drop since April 1993. Shipments fell 1.9% after rising 3.5%.

Orders for fabricated metals fell 0.6% after a 1.1% rise in July. Shipments fell 1.5% after a 2.4% gain.

Orders for electrical equipment fell 2.2% after an 8.1% fall. Shipments fell 4.2% after a 3.4% gain.

Orders for machinery fell 6.2% after growing 3.7% in July. Shipments fell 0.7% after a 1.0% decline.

Orders for transportation goods fell 8.9% after growing 2.8%. Shipments fell 7.7% after rising 2.4%.

Orders for electronics (excluding semiconductors) rose 1.9% after dropping 4.5%. Shipments (including semiconductors) fell 4.8% after rising 6.2%.


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Greg Robb is a senior reporter for MarketWatch in Washington.