Demand diminishing among companies as durable goods costs rise

Weak demand has caused orders of durable goods to fall over the past month. Orders for durable goods, or manufactured goods that last for long periods of time, rose in January, but increasing costs may have put a damper on the willingness of businesses to order such products. Transportation orders, though, were not affected, as people are getting more cars. Post resource – Demand shrinking among businesses as durable goods prices rise by MoneyBlogNewz.

Manufacturers have to deal with demand falling unless in transportation

AOL News reports that durable products orders have gone down significantly for a few months while transportation has been doing great. There was a 1.9 percent increase in February in automobiles and trucks orders. There was a 26.7 percent increase in commercial aircraft orders. However, orders for new defense aircraft dropped by 18.4 percent, as new planes and helicopters aren’t a priority to a cash-strapped Congress. It is the fourth time in the last five months that there was a decrease in durable goods. In fact, in February, there was a 0.6 percent decrease, including transportation.

Higher customer price

Energy costs are directly affected by oil prices and gas prices, and speculators have been driving the price of gasoline steadily up for consecutive weeks, causing the cost of consumer goods to rise, in accordance with CNN. For instance, the prices of Folgers and Maxwell House coffee were elevated by Smuckers and Kraft, the parent companies of the brands. Consumer costs for essential products have been slowly but steadily increasing, and increased energy costs ensure that trend will continue. However, prices of non-essential products, like the iPad 2, are anticipated to hold steady as consumers will hold off on gadgets if food prices go through the roof.

Gas prices continue to increase

The increase in the price of gasoline is not because of a shortage of supply. MSNBC states that gas is increasing anyway which could hurt consumers after hurting retailers. Transportation costs affect products, in the more it costs to get things like Huggies diapers and T-shirts to stores, the more stores have to charge for them. Given that businesses are cutting back on durable products, and producers are raising costs, consumers are likely to see an increase in the cost of food and other essential items. The things people will always purchase, such as gas, coffee or bread, are the ones producers can charge more for. CNBC reports that individuals could probably get cheaper iPads considering the demand for non-essentials has gone down.

Information from

Daily Finance

dailyfinance.com/article/durable-goods-orders-fall-09-percent-in/785798/

CNN

money.cnn.com/2011/03/18/news/economy/rising_prices/index.htm

CNBC

cnbc.com/id/42248040

MSNBC

msnbc.msn.com/id/42197087/ns/business-consumer_news/