Orders for U.S. Durable Goods Probably Rose on Exports, Inventory Rebuild

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  • Posted on April 26, 2011


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    April 25 (Bloomberg) — David Kelly, chief market strategist for JPMorgan Funds, discusses quarterly earnings, the stock market and investment strategy. Kelly talks with Betty Liu and Jon Erlichman on Bloomberg Television’s “In the Loop.” Todd Colvin, vice president at MF Global Inc., also speaks. (Source: Bloomberg)

    Orders for long-lasting goods probably rose in March for a second time in three months, reflecting demand for machinery and aircraft, economists said before a report today.

    Bookings for equipment meant to last at least three years climbed 2.3 percent after a 0.6 percent decline the prior month, according to the median projection of economists surveyed by Bloomberg News.

    Exports to emerging economies like China and the need to increase stockpiles are drivers of the factory rebound spearheading the recovery. Gains in business investment will probably help sustain the economic expansion, one reason why Federal Reserve policy makers today are likely to reiterate plans to halt their bond purchases by the end of June.

    “Demand is broadly recovering across the economy and manufacturers are certainly seeing strong new order growth as a result,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit.

    The Commerce Department’s report on orders is due at 8:30 a.m. in Washington. Economists’ estimates ranged from a decline of 3.5 percent to a gain of 6.7 percent.

    Boeing Co. (BA), the largest U.S. maker of aircraft, said this month it received orders for 98 planes in March, up from 21 the prior month. Still, industry data may not correlate precisely with the government statistics on a month-to-month basis.

    Broad-Based Gain

    Excluding demand for transportation equipment, which is volatile month to month, orders for durable goods climbed 2 percent after a 0.3 percent decline in February, the Bloomberg survey showed. Also eliminating demand from the military, bookings for capital goods, like machinery used to produce other products, increased 3.8 percent, according to the survey median.

    Japan’s March 11 earthquake and subsequent nuclear crisis have affected some producers more than others.

    Hyundai Motor Co. (005380), South Korea’s largest carmaker, posted a 32 percent gain in U.S. sales in March, while Japan’s Toyota Motor Corp. reported a monthly decline. Japan’s Nissan Motor Co. and Honda Motor Co. both had sales gains even as they braced for the full effect of the earthquake, which is still disrupting auto and parts production.

    U.S. auto sales fell in March to a 13.06 million annual pace from 13.38 million in February, which was the most in 18 months, according to industry data.

    Japan Disaster

    Microchip Technology Inc. (MCHP) Chief Executive Officer Steve Sanghi last month was fielding a “barrage” of requests for replacement parts after the earthquake disrupted global semiconductor supplies.

    Customers should order at least 12 weeks’ worth of their needs for microcontrollers, used in devices from washing machines to coffee makers to car parts, Sanghi wrote in a March 21 letter. “I am expecting a huge surge of redesign inquiries,” Sanghi wrote.

    Texas Instruments Inc. (TXN), the largest analog-chipmaker, on April 18 forecast second-quarter revenue and profit that fell short of some analysts’ estimates as lower Japanese demand and falling mobile-phone chip sales hurt orders. Texas Instruments said the earthquake and tsunami curbed demand in Japan and cut output at the plants it operates, as well as those of its customers and suppliers.

    The business spending that helped lead the economy out of recession in mid-2009 may be helped this year in part by President Barack Obama’s December compromise with congressional Republicans on taxes. Companies will be able to depreciate 100 percent of investments in capital equipment in 2011.

    Growing Exports

    Demand from fast-growing countries like China and Brazil is spurring U.S. exports of machinery and consumer goods. Sales overseas reached the highest level on record in January before falling in February for the first time in six months.

    Machinery and equipment makers have outperformed the broader stock market. The Standard & Poor’s Supercomposite Machinery Index has gained 12 percent so far this year, compared with a 7.1 percent increase for the S&P 500 Index.

    “Manufacturing continued to lead” the improvement in economic activity, according to the Fed’s Beige Book survey of regional economies issued April 13. “All twelve Districts reported that manufacturing activity increased since their previous reports.”

    Fed Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June, according to investors and economists including David Kelly at JPMorgan Funds. Bernanke will give a press conference today in Washington at 2:15 p.m. after ending the policy meeting.

    Bloomberg Survey ===================================================== Durables Durables Cap Goods Orders Ex-Trans Core MOM% MOM% MOM% ===================================================== Date of Release 04/27 04/27 04/27 Observation Period March March March —————————————————– Median 2.3% 2.0% 3.8% Average 2.2% 1.7% 3.1% High Forecast 6.7% 3.5% 4.4% Low Forecast -3.5% -0.6% 0.9% Number of Participants 74 46 7 Previous -0.6% -0.3% -0.7% —————————————————– 4CAST Ltd. 3.0% 2.5% — ABN Amro 3.0% — — Action Economics 1.0% 0.5% — Aletti Gestielle 1.8% — — Ameriprise Financial 2.3% 2.6% — Banesto 1.1% — — Bank of Tokyo- Mitsubishi 1.6% — — Bantleon Bank AG 2.2% 2.4% — Barclays Capital 2.8% 1.0% — Bayerische Landesbank 3.0% 2.2% — BBVA 1.0% 0.8% — BMO Capital Markets 2.3% 1.0% — BNP Paribas 1.4% — — BofA Merrill Lynch 3.0% 1.0% — Briefing.com 3.0% 3.5% — Capital Economics 1.8% 1.5% — CIBC World Markets 3.0% 1.5% — Citi 1.9% 0.4% 0.9% ClearView Economics 1.0% — — Commerzbank AG 1.5% 2.2% — Credit Agricole CIB 1.1% 1.7% — Credit Suisse 3.0% 2.0% — Daiwa Securities America 2.0% — — DekaBank 3.0% 1.6% 4.0% Desjardins Group 2.0% — — Deutsche Postbank AG 3.0% 2.0% — DZ Bank 1.6% 2.3% — Fact & Opinion Economics 2.7% — — First Trust Advisors 5.9% 2.2% — FTN Financial 2.5% 1.0% — Goldman, Sachs & Co. 3.0% — — Helaba 2.5% — — HSBC Markets 1.3% 0.9% 1.1% Hugh Johnson Advisors 1.0% — — IDEAglobal 1.5% 2.0% — IHS Global Insight 3.7% — — Informa Global Markets 2.0% 0.7% — ING Financial Markets 1.9% 2.5% — Insight Economics 1.5% — — Intesa-SanPaulo 2.3% 2.8% — J.P. Morgan Chase 3.8% 2.7% 4.2% Janney Montgomery Scott 6.7% 1.2% — Jefferies & Co. 1.0% — — Landesbank Berlin 5.5% 2.0% — Manulife Asset Management 1.5% 1.5% — MET Capital Advisors 3.0% — — MF Global 4.0% 2.0% 3.8% Mizuho Securities -1.0% 0.5% — Moody’s Analytics 2.7% 2.2% — Morgan Keegan & Co. 0.2% — — Morgan Stanley & Co. 3.0% — — Natixis 1.0% 0.5% — Newedge 2.0% 2.8% — Nomura Securities 2.9% — — Nord/LB 2.5% 3.0% — OSK Group/DMG 3.0% — — Parthenon Group -0.9% -0.6% — Pierpont Securities -3.5% — — PineBridge Investments 1.1% 3.0% — PNC Bank 0.5% 1.5% — Raiffeisenbank International 3.0% 3.0% — RBC Capital Markets 1.8% 1.0% 4.4% RBS Securities Inc. 2.3% — — Scotia Capital 3.0% 2.2% — Societe Generale 4.9% 0.5% — Stone & McCarthy Research 1.3% — — TD Securities 2.0% 1.0% — UBS 5.5% 2.0% — UniCredit Research 3.0% — — University of Maryland 1.0% — — Wells Fargo & Co. 1.7% 1.9% — WestLB AG 2.0% — — Westpac Banking Co. 2.5% — — Wrightson ICAP 4.0% — 3.0% =====================================================

    To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

    To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

    Bloomberg/AC



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