Tuesday, January 29, 2008

About that Weak Economy.....

Yeah, not so much.

Jan. 29 (Bloomberg) -- Orders for U.S. durable goods rose more than forecast in December, suggesting business investment is holding up even as other parts of the economy weaken.

The 5.2 percent increase was the biggest since July and follows a revised 0.5 percent gain in November that was greater than previously reported, the Commerce Department said today in Washington. Excluding transportation, demand rose 2.6 percent.

If the economy is so bad, why are companies investing in capital goods?

Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, climbed 4.4 percent, the most since March 2007. Shipments of those items, used in calculating gross domestic product, rose 2 percent, the most since March 2006.

Orders excluding defense equipment increased 2.9 percent. Orders for defense equipment jumped 81 percent, led by a surge in aircraft bookings.

The rise in total orders was led by the biggest increase in machinery bookings since December 2006, a jump in commercial aircraft and a 12 percent jump in communications gear.

Will this affect the Fed's decision tomorrow? I'm sure the Fed already has some information about the employment report tomorrow and that is one of their most important indicators so this may not mean anything. We'll get the ADP employment report tomorrow and that may give us a clue as to what to expect on Friday.

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