Orders for U.S. manufactured durable goods showed a steep drop in the month of February, according to a report released by the Commerce Department on Tuesday, with orders for transportation equipment leading the way lower.
The Commerce Department said durable goods orders tumbled by 1.6 percent in February after inching up by a downwardly revised 0.1 percent in January.
Economists had expected durable goods orders to plunge by 1.8 percent compared to the 0.3 percent increase that had been reported for the previous month.
The significant decrease in durable goods orders came as orders for transportation equipment plummeted by 4.8 percent in February after rising by 0.4 percent in January.
Orders for non-defense aircraft and parts nose-dived by 31.1 percent in February after soaring by 9.2 percent in the previous month.
Excluding the steep drop in orders for transportation equipment, durable goods orders actually inched up by 0.1 percent in February after edging down by 0.1 percent in January. Ex-transportation orders had been expected to rise by 0.2 percent.
A notable increase in orders for electrical equipment, appliances, and components, was largely offset by decreases in orders for machinery and computers and electronic products.
The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending, edged down by 0.1 percent in February after climbing by 0.9 percent in January.
Paul Ashworth, Chief U.S. Economist at Capital Economics, noted shipments in the same category were unchanged, albeit after a 1.0 percent jump in January.
“Nevertheless, non-defense capital goods (ex-aircraft) shipments are on track to expand by a modest 4% annualized in the first quarter, which points to an equally modest gain in business equipment investment,” Ashworth said.
He added, “The moderation in the survey evidence over the past few months, which reflects the global manufacturing downturn, indicates that underlying durable goods orders and shipments will continue to grow at a very modest pace over the next few months.”
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