Tuesday, April 24, 2007

New Orders

The Commerce Department's durable goods orders data release showed significant strength in manufacturing.

New orders for durable goods were up 3.4 percent compared with a 2.2 percent consensus estimate according to Bloomberg and 2.7 percent polled by the Wall Street Journal. Particularly relevant to Wichita, new orders for commercial aircraft were up by 37.6 percent more than offsetting a 48.8 percent decline in military arircraft orders. In a significant reverse of form, motor vehicles and parts were up 3.3 percent. Boeing announced 27 percent higher profits based on its revenues which are being driven by its strong order book.

Will the delating housing bubble pull us down?

The national housing market remains a worry for the economic outlook. Yesterday we learned existing home sales were down by 8.4 percent in March, the largest drop in eighteen years. Weather has caused these numbers to bounce like a yo-yo. Indeed they spiked in February setting up a snap back. Thomas Lawler, the Vienna, Virginia housing economist, predicted a 7 percent drop in house prices this year (fourth quarter, 2007 over fourth quarter, 2006.) Lawler's prediction was quoted in today's Wall Street Journal. More encouraging was a 1.6 percent drop in the inventory of unsold homes and higher than expected new home sales in March of 1.213 million.

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