U.S. economic report – week of August 22, 2005

U.S. economic report – week of August 22, 2005

Durable goods orders plummet in July while a surprise hurricane in the Atlantic and Gulf threatens to hamper oil production. As reported earlier this week on SteelOrbis, the US Commerce Department released data showing that durable goods orders declined 4.1 percent in July. Durable goods are products that last more than three years. Overall weakness was reported in many sectors. Machinery orders fell 6.2 percent while fabricated metal orders dropped 4.4 percent. The decrease follows a 1.9 percent increase in June. Meanwhile, newly crowned Hurricane Katrina has pummeled the Southeast Florida area and, having reenergized in the Gulf of Mexico, could interrupt oil production. Indeed, despite being assured that the storm will likely miss oil platforms, British Petroleum and Shell announced they were evacuating all non-essential personal ahead of the storm. In response to the news, oil prices briefly hit a new record of $68 on Thursday before settling back to $67.49. On the flip side, new home sales rose to a fresh record in July, jumping six percent and hitting an annual rate of 1.41 million. Despite the record, the median price for a new home fell seven percent to $208’000 last month. The decline means that the median price has fallen more than 11 percent since it hit a record of $239’000 in February. In related news, mortgage rates dipped in what is seen as a temporary reprieve from an overall rising trend. The average 30-year fixed rate fell to 5.77 percent from 5.8 percent a week earlier. In the steel sector, overall domestic steel production decreased 7.4 percent to 1.96 million tons compared to 2.1 million tons for the same period in 2004. That was, however, a 4.1 percent increase from 1.87 million tons the week before. Year-to-date production totaled 65.6 million tons last week, a year-on-year decline of 4.1 million tons. Weekly production capacity totaled 84.6 percent, a weekly increase from 81.3 percent. Regionally, the Northwest Indiana/Chicago area reported it produced 461’000 tons last week compared to 423’000 tons the previous week. The Pittsburgh/Youngstown, Ohio area reported it produced 237’000 tons last week compared to 230’000 tons the previous week. On Wall Street, the major indices continue to walk a fine line between gains and losses. It has been a week of ups and downs but mostly downs. Investors continue to remain cagey on oil fears and all the late Friday markets were down on news that oil had risen $0.21 to $67.70 and the consumer sentiment index had fallen three points. The US steel index was down 2.71 or 1.77 percent to 150.66.