By Joshua Newell
WASHINGTON (MNI) – April Durable Goods Orders are expected to fall
for the first time since December 2010, largely due to the continued
supply disruptions from the Japan earthquake crisis and a drop in
aircraft.
In a Market News International survey of economists, durables are
forecast to decline by 2.6%, a marked turnaround from the 2.5% growth
the month previous. Durables have grown for the past three months.
General retail sales, which include durable goods, rose by 0.5% in
April; however, sales of items such as furniture and electronics, which
are considered durable goods, fell rather sharply.
Mike Englund, chief economist of Action Economics, cited the
transportation sector as the main reason for the drop, forecasting a 6%
decline in transportation orders “due to a plunge in Boeing orders.”
Also, a variety of manufacturing indexes fell this month; the
Philadelphia Fed Index dropped by over 14 points and the Chicago Fed
Index fell into negative territory.
According to David Resler, chief economist with Nomura
Securities, this weak expectation is not due to the rise of commodity
prices. Rather, “We expect softness in the number resulting from supply
disruptions in the auto industry affecting other industries.”
He continues, saying that these broken supply chains should have
only transitory effects, and that this decline is not part of a larger
trend.
Englund reiterated this view, pointing out that “the first month of
the quarter generally sees a decline in growth” and that “the numbers
are encouraging in general.”
The April Durable Goods Orders report will be released Wednesday at
8:30 ET by the Department of Commerce.
— Joshua Newell is a Washington reporter for Need to Know News.
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$]
