Manufacturing is growing but the pace of growth has decelerated. The outlook for manufacturing production in 2006 is for moderate growth.

The important aerospace industry is expanding again and overall manufacturing activity is growing, but the pace of growth in manufacturing is overstated in the durable goods report.

Overall, it's going to be a moderate growth year, starting out with a bang and then weakening toward the end of the year.

Durable goods will continue to lead the manufacturing expansion in 2006. The United States economy is bumping up against capacity constraints in many sectors and businesses, particularly non-manufacturing businesses, are stepping up investment spending.

The underlying details of this report paint a stronger picture of the manufacturing sector, as evidenced by the robust growth rate of orders excluding transportation over the last three months.

If manufacturing is recovering [from] this drag on growth, which is already strong, it is probably going to raise some concerns at the Fed.