Implications: The V-shaped recovery continues. New orders for durable goods were up 2.9% in April and are up at a 19% annual rate in the past six months. Although orders ex-transportation dipped in April, these orders were actually unchanged if we factor-in upward revisions for March. In addition, orders ex-transportation are up at a 20% annual rate in the past six months. The business investment side of the report was particularly impressive, with orders for capital goods (durables used in the production process, rather than sold to consumers) up 7.4% in April and up 30% versus a year ago, a path that rivals the steepest yearly gains of the past 20 years. Meanwhile, shipments of "core" capital goods (which exclude defense and aircraft) increased again and are up at a 16% rate in the past six months, also rivaling the steepest gains of the last 20 years.
In other recent news, the Richmond Fed index, a measure of manufacturing in the Mid-Atlantic, came in at +26 for May versus +30 for April, signaling continued rapid expansion in the factory sector. Cash-rich companies (who are earning essentially zero percent interest on their money) are deciding to invest.
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Posted on Wednesday, May 26, 2010 @ 9:42 AM
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