DATA SNAP: US Jan Durable Goods Down More Than Expected

DATA SNAP: US Jan Durable Goods Down More Than Expected
===============================================================  Jan Durable Goods Orders:      Jan      Dec  ! Consensus:    !  Total Orders:                -5.2%    -4.6%r !        -3.0%  !  Ex-Transportation:           -2.5%    -5.5%r ! Actual:       !  Ex-Defense:                  -2.3%    -7.5%r !        -5.2%  ! ===============================================================     By Jeff Bater    Of DOW JONES NEWSWIRES  

WASHINGTON -(Dow Jones)- Durable goods orders plunged in January, a sign of future demand fell, and a barometer of capital spending by businesses dropped, according to data showing how the recession is battering the factory sector.

Manufacturers' orders for long-lasting goods decreased by 5.2% last month to a seasonally adjusted $163.80 billion, the Commerce Department said Thursday.

The 5.2% decrease was broad based and bigger than projected. Wall Street expected a decline of 3.0% for January.

Durables, which are goods designed to last at least three years, fell 4.6% in December, revised down from a previously estimated 3.0% decrease.

Year over year, durables were 26.4% lower, in unadjusted terms.

A key barometer of business equipment spending - orders for non-defense capital goods excluding aircraft - fell by 5.4%, after decreasing 5.8% in December. Year over year, orders were down 20.2%. January shipments for non-defense capital goods excluding aircraft fell by 6.6%, after being flat in December; the shipments are used in calculating gross domestic product, which is the barometer for economic growth in the U.S. The government will release its second estimate of fourth-quarter 2008 GDP on Friday; the consensus of economists is the government will make a sharp revision down, lowering its GDP estimate to a 5.4% drop from an originally estimated 3.8% drop.

A deepening recession has meant lower demand, leaving companies with excess supplies of goods. Output by manufacturers has fallen; in January, U.S. industries' production dropped 1.8% on the month and 10% on the year. Their use of capacity shrank to 72.0% - the lowest since February 1983.

Thursday's data showed manufacturers' durable goods inventories decreased 0.8% last month; it was the biggest decline since 0.8% in September 2003. U.S. businesses - manufacturers and others - are working off excess supply. The drawdown will restrain the economy in the short run; inventories are a component of GDP.

The National Association of Business Economics expects GDP will contract the first half of 2009, with the economy growing in the second half. NABE forecasters see a 5.0% drop in the first quarter, a 1.7% decline in the second quarter, and 1.6% growth in the second half of the year.

Within the durables data, unfilled orders are a sign of future demand. That category decreased in January by 1.9%, the largest fall since 1.9% in January 2002.

Demand for durable goods in the transportation sector fell 13.5%, after dropping 1.5% in December. Orders for commercial planes rose 81.7%, but military aircraft orders fell 28.3%.

Motor vehicles and parts decreased by 6.4% for the second straight time last month and were down 34.6% on the year. Car production is being cut because of weak sales as consumers refrain from making big purchases in fear of layoffs.

Excluding the transportation sector, orders for all other durables dropped by 2.5%. Orders fell 5.0% for computers and electronics, 2.0% for machinery, 1.1% for fabricated metals, 4.6% for primary metals, and 6.1% for electrical equipment.

Demand ex-transportation had gone down 5.5% in December.

January capital goods orders decreased by 8.8%. Non-defense capital goods - items meant to last 10 years or longer - slid by 2.7%.

Defense-related capital goods orders plunged 35.3%. Orders for everything except defense goods fell by 2.3% in January, after going 7.5% lower in December.

Durable-goods shipments of manufacturers fell 3.7% last month.

    -By Jeff Bater, Dow Jones Newswires; 202-862-9249; [email protected]m  

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

February 26, 2009 08:45 ET (13:45 GMT)

Copyright 2009 Dow Jones & Company, Inc.