This morning the Commerce Department's Bureau of the Census issued its Advance Report On Durable Goods Orders for April 1996.

Durable goods (trains, planes, automobiles, TV's, refrigerators, computers) are defined to be items that have a usable life of at least three years. The time to produce durable items is typically longer than for other goods. So, economy watchers look to durable goods statistics for indications of economic activity in the months to come.

During April, new orders for manufactured durable goods decreased $3.3 billion or 1.9 percent to $166.0 billion. This followed a 2.6 percent March increase and a 2.3 percent decline in February. The April decrease is the third decrease in the last four months. As in the past, the volatile transportation sector strongly influenced the monthly reading. In April, orders for transportation equipment decreased $5.5 billion or 12.6 percent to $38.0 billion, as a large decrease in aircraft and parts more than offset an increase in motor vehicles and parts.

If the contribution from the transportation sector had been excluded, new orders would have increased $2.2 billion or 1.7 percent to $128.0 billion. In fact, if transportation orders had been ignored, new orders would have risen in four out of the last five months.

The month-to-month order variations average out if we examine the data over a longer period of time. I usually use a year. For the twelve-month period ending in April, orders were up 6.40 percent. This compares with a year-over-year gain of 3.07 percent in March, and an annual growth rate of 1.03 percent in February. The February figure was the lowest reading since August of 1992. So, as we've seen with some of the other indicators we talk about here, in recent months, the year-over-year growth rate has been increasing. Will this expansion persist? We saw yesterday that some of the employment data suggested that it might not. We'll find out in the months to come.

Byline: Lafferty (MF Merlin)