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Durable goods orders: large drop in electronics - what does it mean?!
February 26, 2000 |Estimated reading time: 2 minutes
Durable goods orders: large drop in electronics - what does it mean?! -
by Walt Custer
Feb, 26, 2000
This column appears monthly in CircuiTree magazine
New orders for manufactured durable goods in the United States reversed from its December growth track to record a 1.3% or $2.8 billion decline in January to $214.8 billion, the Department of Commerce, Bureau of the Census reported.
The attached graph reveals that this might just be normal "month to month" variation following December's large jump. The slide can also be attributed to a semiconductor order correction. Chip orders have been witnessing a sharp surge in recent months, perhaps due to some shortage concerns and pre-Y2K stockpliling.
However, a clearer picture will emerge once the factory orders report is released in the first week of March, providing details on which sectors witnessed major drops -- components or electronic equipment.
But, the silver lining on this decline is the fact that though January 2000 electronic durable goods orders declined 13.2% over December, the orders were still up 3% over January 1999.
New orders
New orders for manufactured durable goods in January decreased $2.8 billion or 1.3 percent to $214.8 billion, the Department of Commerce, Bureau of the Census reported today. This follows a 6.3 percent December increase. Excluding transportation, new orders decreased 0.5 percent. New orders for January 2000 are 6.5 percent above January 1999.
Electronic and other electrical equipment had the largest decrease, $5.5 billion or 13.2 percent to $36.0 billion. This is the largest decrease since July 1997. Transportation equipment decreased $2.0 billion or 3.6 percent to $53.3 billion; decreases in shipbuilding and tanks and aircraft and parts more than offset increases in motor vehicles and parts and railroad equipment. Industrial machinery and equipment increased $4.7 billion or 12.3 percent to $43.1 billion. This is the largest increase since February 1985. Primary metals increased $0.3 billion or 1.7 percent to $15.7 billion.
Shipments
Shipments of durable goods in January increased $5.8 billion or 2.8 percent to $211.9 billion, following a 0.8 percent December increase. This is the eighth increase in the last nine months. Shipments for January 2000 are 9.2 percent above January 1999.
Industrial machinery and equipment, led by computer and office equipment, had the largest increase, $3.7 billion or 9.6 percent to $42.1 billion. This is the largest increase on record. Electronic and other electrical equipment, up three consecutive months, increased $1.6 billion or 4.5 percent to $38.0 billion. Primary metals, up eight of the last nine months, increased $0.2 billion or 1.4 percent to $16.0 billion. Transportation equipment decreased $0.6 billion or 1.2 percent to $49.5 billion.
Unfilled orders
Unfilled orders for durable goods in January increased $2.9 billion or 0.6 percent to $515.2 billion, following a 2.3 percent December increase. This is the seventh consecutive monthly increase. Transportation equipment, led by aircraft and parts, had the largest increase, $3.8 billion or 1.7 percent to $230.9 billion. Industrial machinery and equipment, up six of the last seven months, increased $1.0 billion or 1.3 percent to $82.3 billion. Electronic and other electrical equipment, down for the first time since November 1998, decreased $1.9 billion or 2.3 percent to $83.5 billion. Primary metals, down three consecutive months, decreased $0.3 billion or 0.8 percent to $31.8 billion.