Production orders imply a slowdown ion US manufacturing

| June 24, 2005 | 0 Comments
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Orders for durable goods in the United States were lower than expected in May but the housing market remained healthy, according to new data.

According to one analyst, the slowdown in new durable goods orders implies a coming production slowdown, although this could be compensated for by orders that have not yet been filled.

Orders were up 5.5 percent overall, but most of that figure was due to a 165 percent increase in civilian aircraft orders. Discounting that sector, orders were actually down by 2.3 percent.

The biggest decline came in computers, where orders were down by 7 percent. Machinery orders declined by 1.9 percent, while non-defense capital goods shipments fell 0.7 percent.

While industrial activity seemed to slow, the US housing market seemed to be doing very well at just below record levels. New home sales were up in May by 2.1 percent, and they are expected to remain at present levels for the foreseeable future, at least until mortgage rates go up significantly.

The strong tempo of home building has started to slow down the rise in new home prices, and resale prices may begin to slow their rise soon as supply has begun to rise.

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