Economy
Durable Goods Orders Stronger than Expected
Written by Sandy Williams
March 23, 2018
Orders for manufactured durable goods jumped 3.1 percent in February, beating economists’ estimates by nearly double.
The latest report from the Department of Commerce showed core capital goods (non-defense capital goods minus aircraft) rebounded 1.8 percent last month after two consecutive months of decline. The category is seen as a proxy for business spending. Shipments of core capital goods, used to calculate gross domestic product, increased 1.4 percent.
Orders rose in all major categories except computers and telecommunications. Primary metals orders rose 2 percent, fabricated metal products 0.8 percent, and machinery 1.6 percent.
“A strong pickup in February durable goods orders and a broader acceleration in durable goods shipments signals that business investment is on an improving trajectory,” said Carl Riccadonna, Bloomberg Economics. “This is due to a combination of rising ‘animal spirits’ in the corporate sector, which are partly attributable to the administration’s policies, incentivized capital spending in the tax reforms enacted at the end of last year, and more broadly due to the effective middle-stage of the economic cycle commencing — one in which capacity constraints necessitate business investment in equipment, technology and facilities.”
The February advance report on manufacturers’ shipments, inventories and orders follows:
New Orders
New orders for manufactured durable goods in February increased $7.4 billion or 3.1 percent to $247.7 billion, the U.S. Census Bureau announced. This increase, up three of the last four months, followed a 3.5 percent January decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders increased 2.5 percent. Transportation equipment, also up three of the last four months, led the increase by $5.5 billion, or 7.1 percent, to $83.5 billion.
Shipments
Shipments of manufactured durable goods in February, up nine of the last 10 months, increased $2.2 billion or 0.9 percent to $249.7 billion. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase at $0.6 billion, or 1.8 percent, to $33.4 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in February, up five of the last six months, increased $2.3 billion or 0.2 percent to $1,143.3 billion. This followed a 0.3 percent January decrease. Transportation equipment, up two of the last three months, led the increase at $1.4 billion, or 0.2 percent, to $773.2 billion.
Inventories
Inventories of manufactured durable goods in February, up 19 of the last 20 months, increased $1.6 billion or 0.4 percent to $410.6 billion. This followed a 0.4 percent January increase. Transportation equipment, up three consecutive months, led the increase at $0.7 billion, or 0.6 percent, to $132.7 billion.
Capital Goods
Nondefense new orders for capital goods in February increased $3.3 billion or 4.5 percent to $77.4 billion. Shipments increased $0.9 billion or 1.2 percent to $75.3 billion. Unfilled orders increased $2.1 billion or 0.3 percent to $708.6 billion. Inventories increased $1.0 billion or 0.6 percent to $183.1 billion. Defense new orders for capital goods in February increased $1.5 billion or 16.5 percent to $10.7 billion. Shipments decreased $0.4 billion or 3.6 percent to $11.1 billion. Unfilled orders decreased $0.4 billion or 0.3 percent to $140.6 billion. Inventories increased less than $0.1 billion or 0.2 percent to $23.2 billion.
Revised January Data
Revised seasonally adjusted January figures for all manufacturing industries were: new orders, $491.9 billion (revised from $491.7 billion); shipments, $499.2 billion (revised from $498.8); unfilled orders, $1,141.0 billion (revised from $1,141.2 billion) and total inventories, $672.6 billion (revised from $672.4 billion).
Sandy Williams
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