Durable-Goods Orders in U.S. Fell More Than Forecast
By Bob Willis
Feb. 27 (Bloomberg) -- Orders for U.S. durable goods fell more than forecast in January as a slowing economy prompted companies to reduce spending. The 5.3 percent decrease in bookings for goods meant to last several years followed a revised 4.4 percent gain in December that was smaller than previously reported, the Commerce Department said today in Washington. Excluding transportation, demand dropped 1.6 percent, the third decline in four months.
Companies have put investment plans on hold as consumers rein in spending in the face of the biggest housing slump in a quarter century and near-record fuel costs. Federal Reserve Chairman Ben S. Bernanke, testifying before Congress today, may reiterate that policy makers are ready to keep lowering rates in a bid to avert a recession.
``Capital spending is going to slow and is probably going to decline a little bit in the first half'' of the year, said Nigel Gault, director of U.S. research at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. ``If businesses see their markets and profits growing more slowly, they are going to be more cautious about spending.''
Economists forecast durable goods orders would fall 4 percent, according to the median of 72 estimates in a Bloomberg News survey. Projections ranged from declines of 0.5 percent to 7 percent.
The median forecast for bookings excluding transportation equipment called for a 1.4 percent decrease, with estimates ranging from no change to a 2.8 percent drop.
Treasury notes extended gains after the report and the dollar remained lower against the euro.
Manufacturing Downturn Other factory surveys in recent weeks have shown weakness. The Fed Bank of Philadelphia's index of business activity for February fell to the lowest level in seven years, while a New York Fed survey showed manufacturing in the region contracted for the first time in almost three years. Economists surveyed by Bloomberg in the first week of February forecast economic growth would slow to a 0.5 percent annual pace in the first quarter and said the odds of a recession occurring this year were about even.
The decline in orders was led by less demand for computers, communications equipment and aircraft. Guide to Investment Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, declined 1.4 percent, the most since October. Shipments of those items, used in calculating gross domestic product, rose 0.1 percent after a 1.7 percent gain.
Orders excluding defense equipment decreased 4.7 percent and bookings for military gear fell 20 percent. Demand for transportation equipment decreased 13 percent, the most since October 2006, as aircraft orders dropped 31 percent. Demand for automobiles fell 0.8 percent.
Chicago-based Boeing Co., the world's second-biggest airplane maker, said it received 65 aircraft orders in January, down from 287 the previous month. Twenty-one of the orders were from overseas and the origin of the rest wasn't identified.
Ford Motor Co., Chrysler LLC and most Asian automakers said U.S. sales fell in January, setting the industry on a course for its third straight year of decline, figures earlier this month showed.
The auto industry's annualized sales rate for January fell to 15.2 million cars and light trucks from 16.3 million in December. It was the lowest level since a 15.3 million pace in July.
Computers, Communications Bookings for both computers and for communications gear dropped 12 percent. Cisco Systems Inc., the biggest maker of computer- networking equipment, this month lowered its sales forecast after orders slowed in January.
``You do have business executives that are probably as cautious as I've seen them in my business career,'' Chief Executive Officer John Chambers told a press conference in Barcelona, Spain, on Feb. 11. Still, record exports are offsetting some of the slowdown in domestic demand.
Caterpillar Inc., the world's largest maker of bulldozers and excavators, will spend as much as $2.5 billion this year, nearly 50 percent more than last year, to expand production capacity, Chief Executive Officer Jim Owens said at a Bloomberg Television interview Feb. 14 in Fort Lauderdale, Florida. ``We are out of capacity and so are our suppliers,'' he said. ``What is driving it is the strength of the global mining industry, the global oil-and-gas industry and the emerging markets.''
By Bob Willis
Feb. 27 (Bloomberg) -- Orders for U.S. durable goods fell more than forecast in January as a slowing economy prompted companies to reduce spending. The 5.3 percent decrease in bookings for goods meant to last several years followed a revised 4.4 percent gain in December that was smaller than previously reported, the Commerce Department said today in Washington. Excluding transportation, demand dropped 1.6 percent, the third decline in four months.
Companies have put investment plans on hold as consumers rein in spending in the face of the biggest housing slump in a quarter century and near-record fuel costs. Federal Reserve Chairman Ben S. Bernanke, testifying before Congress today, may reiterate that policy makers are ready to keep lowering rates in a bid to avert a recession.
``Capital spending is going to slow and is probably going to decline a little bit in the first half'' of the year, said Nigel Gault, director of U.S. research at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. ``If businesses see their markets and profits growing more slowly, they are going to be more cautious about spending.''
Economists forecast durable goods orders would fall 4 percent, according to the median of 72 estimates in a Bloomberg News survey. Projections ranged from declines of 0.5 percent to 7 percent.
The median forecast for bookings excluding transportation equipment called for a 1.4 percent decrease, with estimates ranging from no change to a 2.8 percent drop.
Treasury notes extended gains after the report and the dollar remained lower against the euro.
Manufacturing Downturn Other factory surveys in recent weeks have shown weakness. The Fed Bank of Philadelphia's index of business activity for February fell to the lowest level in seven years, while a New York Fed survey showed manufacturing in the region contracted for the first time in almost three years. Economists surveyed by Bloomberg in the first week of February forecast economic growth would slow to a 0.5 percent annual pace in the first quarter and said the odds of a recession occurring this year were about even.
The decline in orders was led by less demand for computers, communications equipment and aircraft. Guide to Investment Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, declined 1.4 percent, the most since October. Shipments of those items, used in calculating gross domestic product, rose 0.1 percent after a 1.7 percent gain.
Orders excluding defense equipment decreased 4.7 percent and bookings for military gear fell 20 percent. Demand for transportation equipment decreased 13 percent, the most since October 2006, as aircraft orders dropped 31 percent. Demand for automobiles fell 0.8 percent.
Chicago-based Boeing Co., the world's second-biggest airplane maker, said it received 65 aircraft orders in January, down from 287 the previous month. Twenty-one of the orders were from overseas and the origin of the rest wasn't identified.
Ford Motor Co., Chrysler LLC and most Asian automakers said U.S. sales fell in January, setting the industry on a course for its third straight year of decline, figures earlier this month showed.
The auto industry's annualized sales rate for January fell to 15.2 million cars and light trucks from 16.3 million in December. It was the lowest level since a 15.3 million pace in July.
Computers, Communications Bookings for both computers and for communications gear dropped 12 percent. Cisco Systems Inc., the biggest maker of computer- networking equipment, this month lowered its sales forecast after orders slowed in January.
``You do have business executives that are probably as cautious as I've seen them in my business career,'' Chief Executive Officer John Chambers told a press conference in Barcelona, Spain, on Feb. 11. Still, record exports are offsetting some of the slowdown in domestic demand.
Caterpillar Inc., the world's largest maker of bulldozers and excavators, will spend as much as $2.5 billion this year, nearly 50 percent more than last year, to expand production capacity, Chief Executive Officer Jim Owens said at a Bloomberg Television interview Feb. 14 in Fort Lauderdale, Florida. ``We are out of capacity and so are our suppliers,'' he said. ``What is driving it is the strength of the global mining industry, the global oil-and-gas industry and the emerging markets.''
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