Durable Goods Orders See Biggest Decline Since August 2012 As Weak Aircraft Production Pulls Indicator Down 5.7%

 @MalikFromLA
on April 24 2013 10:47 AM
Manufacturing
National Association of Manufacturers

The surprisingly weak U.S. durable goods report for March signals that business investment growth is slowing and that the April durable goods report will also be disappointing.

March orders for U.S. durable goods -- items like refrigerators and cars that are meant to last more than three years -- dropped to 5.7 percent from the previous month as demand for transportation equipment plunged to its lowest level since August 2012, the Commerce Department said Wednesday.

The decrease, which follows gains in February and December but a loss in January, was worse than the 3 percent analysts expected.

The main reason for the big decline was a drop in commercial aircraft bookings, Paul Ashworth, chief U.S. economist with London-based Capital Economics, said.

"We already knew that Boeing took orders for only 39 aircraft last month, down from an unusually high 179 in February," Ashworth said.

Not counting transportation orders, durable goods fell by 1.4 percent, while transportation measured on its own was down a full 15 percent against the prior month. The only categories with gains in orders were motor vehicles, computers and electronic products.

Weak orders for metals, machinery and electrical equipment are the latest indication that a cooling is occurring in a sector that played a crucial part in the U.S. economy's rebound following the 2008-2009 recession.

"There was a clear weakening in orders as the first quarter went on," Ashworth said. "So the chances are that second-quarter business investment growth will be weaker than 4 percent. It could even be negative."

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