Today the Bureau of the Census of the Department of Commerce released its Advance Report on Durable Goods Manufacturers' Shipments and Orders for June.

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 nondurables. So, economists look to durable goods statistics for indications of economic activity in the months to come.

New orders for manufactured durable goods in June decreased $1.3 billion or 0.8 percent to $169.1 billion. This was the second decline in the past three months. When orders for the sometimes-volatile transportation equipment sector are excluded, the June orders number decreased by $0.8 billion, or 0.6 percent. This was the first decrease in the past six months.

If we look at the orders data over a longer period, the large monthly positive or negative contributions from the transportation sector tend to average out. For the year to date new orders are up 5.4 percent from the same period last year. On a year-over-year basis, new orders for durable goods grew by 6.3 percent. The year-over-year change in orders has been growing steadily since February when it hit low of 1.03 percent.

Shipments of durable goods in June decreased $1.7 billion or 1.0 percent to $165.7 billion -- the first decrease since March. Shipments since the first of the year were 3.5 percent higher than the same period last year.

Unfilled orders for durable goods in June increased $3.4 billion or 0.7 percent to $475.9 billion. This was the ninth increase in the last ten months.

Last week, in his testimony before the Senate banking committee, Fed Chairman Greenspan predicted that a slowdown in household and business expenditures for durable goods, would act to moderate the economic expansion we have been experiencing in the past few months. Perhaps today's report is the first evidence of that slowdown.

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New claims for state unemployment insurance fell to 322,000 during the week ending July 20. This is down from the 367,000 level recorded the preceding week. The more-smoothly-varying four-week moving average of new claims fell by 8,000 claims to 352,500. The four-week moving average of new claims is one of the 11 components of the Composite Index of Leading Economic Indicators. Today's moving average reading is still above the near-term low of 345,750 set eight weeks ago.

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In other news today, it looks like the rise in mortgage interest rates is beginning to take its toll on sales of existing homes. The National Association of Realtors reported today that sales of existing homes fell by 2.3 percent from May to June. The annualized sales rate for May was 4.28 million units. The June annualized rate was 4.18 million. Elsewhere in the housing sector, the number of building permits for construction of new homes has been declining for the past two months -- another sign that activity in the housing sector has been waning.

Byline: Lafferty (MF Merlin)