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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


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June 24, 2005


Decent News That Wasn't

At first it looked like today's release of May durable goods orders was nothing but good news:

New orders for manufactured durable goods in May increased $11.0 billion or 5.5 percent to $210.7 billion, the U.S. Census Bureau announced today.

But then the devil popped out of the details. From Reuters:

New orders for U.S.-made durable goods, except for civilian aircraft and defense, showed unexpected weakness last month, casting some doubt on the economy's health despite continued strength in new home sales...

Orders for long-lasting goods rose a larger-than-expected 5.5 percent in May, but orders fell outside of transportation. Excluding the volatile transportation category, orders for durable goods -- big-ticket items meant to last three years or more -- slipped unexpectedly by 0.2 percent. It was the third decline in the last four months for that category...

The 2.3 percent drop in orders for non-defense capital goods excluding aircraft -- seen as a proxy for business spending -- pushed Treasury debt prices higher and weighed on the dollar. It was the biggest orders slide in that category since October 2004.

If only that was the worst news of the day.  From Bloomberg:

U.S. stocks headed for their steepest weekly decline since April as oil prices held near a record $60 a barrel and a government report showed an unexpected drop in business-equipment orders.

"Oil has been surging all over the place the last couple of weeks,'' said Ted Parrish, who helps manage $1 billion at Hennsler Financial Group in Marietta, Georgia. "Sixty dollars a barrel is a psychological level that really spooked the market.''         

Hard to shake off that oil price development, but not everyone was down in the dumps about the durable goods report.  From Briefing.com:

The headline data are stupendous as non-defense capital goods orders (read business investment) jumped 14.5% to leave a 28% yoy pace. Overall durable goods orders are 10.5% higher yoy as ex-defense orders stand 11% higher from a year ago.  The strong return of business investment after the tax related Q1 slowdown is particularly impressive given that it comes from the airlines already belabored by high energy prices.

Your glass is now half full.

UPDATE: The Skeptical Speculator has more.

June 24, 2005 in Data Releases | Permalink

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