After falling in each of the six previous months, durable goods orders unexpectedly showed a substantial increase in the month of February, according to a report released by the Commerce Department on Wednesday.
The report showed that durable goods orders jumped 3.4 percent in February after falling by a revised 7.3 percent in January. Economists had been expecting durable goods orders to fall by 2.5 percent compared to the 4.5 percent decrease that had been reported for the previous month.
At the same time, the Commerce Department said that the value of durable goods orders for the year-to-date period is down 28.4 percent compared to the same period a year ago.
The unexpected monthly increase in durable goods orders reflected notable increases in orders for machinery, computers and electronic products, and electrical equipment.
Orders for transportation equipment also rebounded, increasing by 2.0 percent in February following an 11.9 percent decrease in January.
Excluding the increase in orders for transportation equipment, durable goods orders increased by 3.9 percent in February compared to a 5.9 percent decrease in January. The increase came as a surprise to economists, who had expected a 2.0 percent decrease.
However, the report also showed that shipments of durable goods edged down 0.5 percent in February following a 5.2 percent decrease in the previous month. This marked the seventh consecutive monthly decrease in shipments.
Peter Boockvar, equity strategist at Miller Tabak said, The key is turning the February orders into future shipments instead of seeing them get canceled.
Inventories of durable goods fell for the second consecutive month, falling by 0.9 percent in February following a 1.1 percent decrease in January. The two consecutive monthly decreases come on the heels of sixteen straight months of inventory growth.
The Commerce Department added that orders for non-defense capital goods, excluding aircraft, which is seen as an indicator of business spending, rose 6.6 percent after falling by a revised 11.3 percent in the previous month.
Next Thursday, the Commerce Department is due to release its monthly report on factory orders, which includes orders for durable goods as well as non-durable goods.
For comments and feedback: contact email@example.com