US Durable Goods Orders Unexpectedly Jumped 3.4%

[Purveyor]

Source: Bloomberg

By Courtney Schlisserman

March 25 (Bloomberg) -- Orders for U.S. durable goods unexpectedly rose in February on a rebound in demand for machinery, computers and defense equipment.

The 3.4 percent increase, the biggest gain in more than a year and the first in seven months, followed a 7.3 percent decrease in January that was larger than previously estimated, the Commerce Department said today in Washington. Excluding transportation equipment, orders gained 3.9 percent, the most since August 2005.

Combined with reports showing improvements in retail sales, residential construction and home resales, the figures indicate the economy is stabilizing after shrinking last quarter at the fastest pace in a quarter century. Stepped-up efforts by the Obama administration and Federal Reserve to ease the credit crunch may help revive growth later this year.

“It’s not going to be downhill forever,” said Stephen Gallagher, chief U.S. economist at Societe Generale in New York, who had forecast no change in durable goods orders. “Once businesses achieve a reduction in their inventories they will pick up their new orders and production.”

‘Some Stability’

Gallagher expects the economy to resume growth in the third quarter. “I’m feeling better about that with this type of news. After some horrific data, we’re seeing some stability.”

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aTNPPHBiy.UE&refer=home

[slackmaster]

1. This kind of bump happens in every recession

Even the most durable goods do eventually wear out and need to be replaced.

I am particularly in tune with the microcomputer industry. The cycles are pretty clear - Consumer-grade computers typically have component failures or become obsolete at about five years. Higher quality systems used by businesses as servers or high-performance workstations don't last much longer than that. Systems administrators can keep them alive for a while by cannibalizing parts, but sooner or later you have to replace any machine that you need to use.

[HereSince1628]

3. Isn't it the "wearing out and being replaced" phenomena that

usually anticipates the bottom to a recession? Interestingly, housing sales were also up in February.

A bunch of good news in the past week seems better than a poke in the eye with a sharp stick.

[slackmaster]

4. I'm not an economist, but I think that does tend to limit the duration of recessions

Just as falling housing prices eventually lead to increased sales. I like good news too.

[liberal N proud]

2. Hope this is a sign that we have bottomed out

and can start a recovery

[cobalt1999]

5. Look at the job loss numbers

Once companies stop shedding jobs, then people still employed will start to feel secure, then they'll start buying, then the economy will pick up.

As long as the economy is still shedding jobs, we aren't at the bottom.

[denverbill]

6. Wow. That's going to ruin Rush's day. Best keep an eye on the Oxycontin. n/t