New orders for durable goods fell by less than expected in the month of March, according to a report released by the Commerce Department on Friday, although the report also showed a notable downward revision to the growth seen in February.
The report showed that durable goods orders fell 0.8 percent in March following a downwardly revised 2.1 percent increase in February. Economists had expected orders to fall 1.5 percent compared to the 3.5 percent increase that had been reported for the previous month.
A 1.4 percent decrease in orders for transportation equipment contributed to the drop in durable goods orders in March, with the drop in transportation equipment orders coming on the heels of a 2.3 percent increase in February.
The decrease in orders for transportation equipment reflected a 1.7 percent decrease in orders for motor vehicles and parts, which more than offset a 4.4 percent increase in orders for non-defense aircraft and parts and a 4.7 percent increase in orders for defense aircraft and parts.
Excluding the drop in transportation equipment orders, durable goods orders fell by a somewhat more modest 0.6 percent in March compared to a revised 2.0 percent increase in February.
The relatively modest decrease in ex-transportation orders compared to economist estimates of a more substantial 1.3 percent drop.
At the same time, the report showed that shipments of durable goods fell 1.7 percent in March, marking the eighth consecutive monthly decrease in shipments.
Noting that shipments gets directly plugged into GDP, Peter Boockvar, equity strategist at Miller Tabak, said, We thus need to see if the orders over the past two months turn themselves into shipments as opposed to getting canceled.
The continued decrease in shipments was partly due to a 6.0 percent decrease in shipments of primary metals. Shipments of machinery and computer and electronic products also showed notable decreases.
The Commerce Department added that inventories of durable goods fell for the third consecutive month, falling by 1.1 percent in March following a 1.3 percent decrease in February.
Additionally, the report showed that orders for non-defense capital goods, excluding aircraft, which is seen as an indicator of business spending, rose 1.5 percent in March following a 4.3 percent increase in the previous month.
Next Friday, the Commerce Department is due to release its report on factory orders in the month of March, which includes orders for both durable and non-durable goods.
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