Delving into Durables
By William Trent, CFA of Stock Market Beat
We aren’t the type who hit the trade button as soon as we see a piece of economic news. For the most part, our trigger fingers are too slow for that sort of thing. We prefer to set it aside until everyone else has moved on to the next thing, then put the data into a longer-term context. That said, we decided to look at the implications, if any, of Friday’s durable goods report - particularly with respect to the technology sector. All data are taken from the Commerce Department and presented on the basis of the non-seasonally adjusted year/year change.
For tech as a whole, shipments accelerated but orders grew at a slower pace compared to April. This suggests the current quarter could be strong but that a slower economy may lie ahead. Both backlog (unfilled orders) and inventory grew at a slower pace, which also is mixed news.With respect specifically to computer-related products, things are generally looking better. The swing to positive year/year growth in shipments and new orders is clearly a plus. The continued drop in inventories is also good. The only negative was the slightly faster drawdown of backlogs.
Communications equipment remains the strongest tech category. Even though the rate of sales growth decelerated it remains high (above 20 percent) and order growth accelerated. Backlogs are flat and inventories, while growing modestly, are doing so at a far slower rate than sales or orders - so no glut yet.
Last but not least are the semis. They only supply their shipment data, but the growth rate in shipments was up nicely. Which is good, because the capacity has been going up so much.
http://www.stockmarketbeat.com/
We aren’t the type who hit the trade button as soon as we see a piece of economic news. For the most part, our trigger fingers are too slow for that sort of thing. We prefer to set it aside until everyone else has moved on to the next thing, then put the data into a longer-term context. That said, we decided to look at the implications, if any, of Friday’s durable goods report - particularly with respect to the technology sector. All data are taken from the Commerce Department and presented on the basis of the non-seasonally adjusted year/year change.
For tech as a whole, shipments accelerated but orders grew at a slower pace compared to April. This suggests the current quarter could be strong but that a slower economy may lie ahead. Both backlog (unfilled orders) and inventory grew at a slower pace, which also is mixed news.With respect specifically to computer-related products, things are generally looking better. The swing to positive year/year growth in shipments and new orders is clearly a plus. The continued drop in inventories is also good. The only negative was the slightly faster drawdown of backlogs.
Communications equipment remains the strongest tech category. Even though the rate of sales growth decelerated it remains high (above 20 percent) and order growth accelerated. Backlogs are flat and inventories, while growing modestly, are doing so at a far slower rate than sales or orders - so no glut yet.
Last but not least are the semis. They only supply their shipment data, but the growth rate in shipments was up nicely. Which is good, because the capacity has been going up so much.
http://www.stockmarketbeat.com/
posted by douglas mcintyre at 10:01 AM
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