I would characterize the durable goods report as weak, not only because the ex-transportation figure was -1.1% but also because of many of the report's details.
One of the most important was the second consecutive drop in orders for nondefense capital goods ex-aircraft, the key gauge of capital spending. This suggests that capital spending might be weakening after several years of nearly double-digit gains.
Shipments of nondefense capital goods are running below the third-quarter average, hinting at a possible negative print on the capex portion of GDP for the quarter. Also pointing to weakness is the inventory-to-shipments ratio, which rose again, suggesting a further unintended buildup of inventories.
The only encouraging news was the second consecutive monthly increase in orders for motor vehicles and parts, which suggests that the drag from autos might be waning.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog Today's Key Data 12/22/2006 8:17 AM EST Here's why this morning's numbers are worth watching.
Tony Crescenzi Blog Inflation Expectations Dipping 12/21/2006 3:20 PM EST Low expectations mean good things for the economy.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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