www.td.
com/economics
TD Economics
Commentary
February 26, 2009
U.S.: CAPITAL EXPENDITURE INTENTIONS SINK
LIKE A STONE IN JANUARY
• U.S. durable goods orders plunged by a worse
than expected 5.2% M/M.
• Core capital goods orders were equally dismal,
falling by 5.4% M/M.
• Excluding transportation, orders were down a
more modest 2.5% M/M.
U.S. durable goods orders plunged a staggering 5.2%
M/M in January, following the downwardly revised 4.6%
M/M drop in December (previously reported as -2.6%
M/M). This was the fifth consecutive monthly drop in this
indicator, and was well over twice the 2.5% M/M drop
expected by the markets. Excluding transportation, the
decline was a more modest 2.5% M/M, which was more
or less in line with the market expectations for a -2.2%
M/M print. Core capital goods orders, which exclude
defense and aircraft orders, were also quite weak, falling
a dramatic 5.4% M/M, following the 5.5% M/M drop the
month before. On an annual basis, orders are now down a
staggering 26.4% Y/Y, while orders excluding transporta-
tion and core capital goods orders are down an equally
dismal 20.5% Y/Y and 20.2% Y/Y, respectively.
The details of the report were downright ugly. There
were significant declines in the orders for almost every
For further information, contact Beata Caranci at 416-982-8067.
TD Economics Commentary
major durable good component, with only orders for the
volatile defense aircraft component (up 81.7% M/M) post-
ing any gains. On the other hand, orders for computers
and electronics (down 5.0% M/M), electrical equipment
(down 6.1% M/M), machinery (down 2.0% M/M), pri-
mary metals (down 4.6% M/M), and fabricated metal
(down 1.1% M/M) all posted significant losses. And de-
spite the increase in defense aircraft orders, total trans-
portation orders were down a staggering 13.5% M/M. And
with inventories falling a modest 0.8% M/M, the invento-
ries to shipments ratio rose to 1.86 in January, from 1.81 in
December.
In the final analysis, it is now very evident that the on-
going U.S. economic recession is taking a heavy toll on
business confidence, and the massive decline in capital
expenditure by U.S. businesses over the past four months
is clearly indicative of the growing reticence among busi-
nesses to boost capital investment in the face of a slump-
ing domestic economy. Moreover, with the significant re-
visions to the previous month, there is every indication that
the downward revisions to Q4 GDP will be substantial. In
the coming months, we expect orders to decline even fur-
ther as the ongoing economic recession takes root.
Millan Mulraine
Economics Strategist
TD Securities
February 26, 2009
 www.td.com/economics

This report is provided by TD Economics for customers of TD Bank Financial Group. It is for information purposes only and may not
be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank
Financial Group and the members of TD Economics are not spokespersons for TD Bank Financial Group with respect to its
business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not
guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and
financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and
uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that
comprise TD Bank Financial Group are not liable for any errors or omissions in the information, analysis or views contained in this
report, or for any loss or damage suffered.

TD Economics Commentary February 26, 2009