Economy

Durable Goods Orders Jump in February

March 26, 2020

Orders for durable goods jumped 1.2 percent in February, but the uptick is not expected to last. Stay-at-home orders and rising unemployment due to the COVID-19 outbreak are likely to stifle demand as the economy heads into a recession.

The volatile transportation category saw new orders for civilian aircraft dip 0.3 percent after a 356.7 percent gain in January. Automotive vehicles and parts were up 1.8 percent in February before factories began cutting production due to the virus.

Core capital goods, non-defense minus aircraft and a proxy for business investment, dropped 0.8 percent after increasing 1.0 percent in January.

“Given that profits are likely now declining, financial market conditions have tightened and with the economy contracting, business investment will take it on the chin,” said Ryan Sweet, a senior economist at Moody’s Analytics. “Business investment in equipment will drop sharply in the second quarter.”

The Census Bureau’s February advance report on durable goods manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in February increased $2.9 billion or 1.2 percent to $249.4 billion. This increase, up four of the last five months, followed a 0.1 percent January increase. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders increased 0.1 percent. Transportation equipment, up two of the last three months, drove the increase by $3.8 billion or 4.6 percent to $87.0 billion.

Shipments

Shipments of manufactured durable goods in February, up following seven consecutive monthly decreases, increased $2.1 billion or 0.8 percent to $252.3 billion. This followed a 0.1 percent January decrease. Transportation equipment, also up following seven consecutive monthly decreases, drove the increase by $2.4 billion or 2.9 percent to $85.0 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in February, up four of the last five months, increased $1.4 billion or 0.1 percent to $1,158.6 billion. This followed a virtually unchanged January increase. Transportation equipment, up seven of the last eight months, drove the increase by $1.9 billion or 0.2 percent to $791.3 billion.

Inventories

Inventories of manufactured durable goods in February, up 17 of the last 18 months, increased $0.1 billion or virtually unchanged to $434.9 billion. This followed a 0.1 percent January decrease. Transportation equipment, up 19 of the last 20 months, drove the increase by $0.6 billion or 0.4 percent to $151.7 billion.

Capital Goods

Nondefense new orders for capital goods in February increased $0.4 billion or 0.5 percent to $73.1 billion. Shipments increased $1.0 billion or 1.3 percent to $74.3 billion. Unfilled orders decreased $1.2 billion or 0.2 percent to $670.0 billion. Inventories increased $0.2 billion or 0.1 percent to $198.3 billion.

Defense new orders for capital goods in February increased $3.1 billion or 25.7 percent to $15.2 billion. Shipments decreased $0.2 billion or 1.5 percent to $13.1 billion. Unfilled orders increased $2.1 billion or 1.3 percent to $165.6 billion. Inventories decreased less than $0.1 billion or virtually unchanged to $24.1 billion.

Revised January Data

Revised seasonally adjusted January figures for all manufacturing industries were: new orders, $498.5 billion (revised from $497.9 billion); shipments, $502.1 billion (revised from $501.8 billion); unfilled orders, $1,157.3 billion (revised from $1,157.0 billion) and total inventories, $702.9 billion (revised from $703.4 billion).