Headline numbers were as follows: New Orders down 5.2%, Shipments down 3.7%, Unfilled Orders down 1.9%
We'll focus as we usually do on the tech sector. The Durable Goods report bundles a number of technology sub-sectors into the Computers and Electronic Products category. Here are the numbers for that category:
- New Orders: down month-over-month 5%, down year-over-year 14.6% (wow!)
- Shipments: down month-over-month 3.7%, down year-over-year 15.6% (wow again!)
- Unfilled Orders: down month-over-month 1%, up year-over-year 1.8%
Buried within the Shipments results are some startling numbers. Computer and Related Products shipments down 10.7% month-over-month and down 29.8% year-over-year. Semiconductor shipments down 15.3% month-over-month and down 28.5% year-over-year.
This next chart shows Unfilled Orders contrasted with the monthly closing prices of the SPDR Tech ETF (XLK). Note how Unfilled Orders generally kept increasing despite the onset of the global recession. That is, until now.
In a previous post I noted how New Orders and Unfilled Orders continued at higher levels than actual Shipments. I attributed the discrepancy to the fact that orders can be canceled before they ever turn into a shipment, especially in times of economic stress as we are experiencing today.
Now we see both measures of orders declining, especially New Orders. Since orders tend to be a forward-looking measure, this can't bode well for the tech sector.
So in general these numbers show that technology has been in free-fall for the last six months. Worse, these numbers indicate that the rate of decline is not slowing noticeably yet. The recent run-up in the NASDAQ is looking more and more like a bear market rally. With this latest Durable Goods report it is not surprising to see the NASDAQ giving up the last month's gains. Will the index join the Dow by making new lows? I wouldn't be surprised.