Economy

Durable Goods Orders Disappoint in March

April 25, 2016

Durable Goods orders increased 0.8 percent to $230.7 billion in March, according to the Commerce Department. March’s increase is the second one in the past three months and follows a 3.1 percent decrease in February and a 4.3 increase in January. The increase fell below economist consensus of 1.7- 1.9 percent.

A surge in military equipment demand led the increase as orders for defense capital goods increased 48.4 percent from February. Excluding defense, new orders decreased 1.0 percent. Transportation equipment, a volatile component of the new orders index, was up 2.9 percent. Excluding transportation new orders decreased 2 percent.

At best you’re treading water here,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York. “There is a general carving out of a bottom in the weakness that’s plagued the manufacturing space, but I don’t think we’re heading into a significantly more upbeat backdrop unless you start to see a firmer recovery in oil.”

Shipments fell 0.5 percent and unfilled orders inched down 0.1 percent. Shipments of core capital goods, used to calculate equipment spending in the gross domestic product report, rose 0.3 percent after a decrease of 1.8 percent in February. Durable goods inventories were flat in March.

The text of the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders March 2016 from the Department of Commerce follows:

New Orders. New orders for manufactured durable goods in March increased $1.8 billion or 0.8 percent to $230.7 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent February decrease. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders decreased 1.0 percent. Transportation equipment, also up two of the last three months, drove the increase, $2.2 billion or 2.9 percent to $76.0 billion.

Shipments. Shipments of manufactured durable goods in March, down three of the last four months, decreased $1.1 billion or 0.5 percent to $237.0 billion. This followed a 1.0 percent February decrease. Transportation equipment, also down three of the last four months, drove the decrease, $1.4 billion or 1.8 percent to $77.5 billion.

Unfilled Orders. Unfilled orders for manufactured durable goods in March, down three of the last four months, decreased $1.3 billion or 0.1 percent to $1,182.5 billion. This followed a 0.4 percent February decrease. Transportation equipment, down four consecutive months, drove the decrease, $1.6 billion or 0.2 percent to $787.3 billion.

Inventories. Inventories of manufactured durable goods in March, up following two consecutive monthly decreases, increased less than $0.1 billion or virtually unchanged to $394.1 billion. This followed a 0.3 percent February decrease. Fabricated metal products, up following four consecutive monthly decreases, drove the increase, $0.2 billion or 0.5 percent to $48.5 billion.

Capital Goods. Nondefense new orders for capital goods in March decreased $0.8 billion or 1.1 percent to $71.6 billion. Shipments increased $0.2 billion or 0.3 percent to $75.1 billion. Unfilled orders decreased $3.5 billion or 0.5 percent to $738.9 billion. Inventories increased $0.6 billion or 0.3 percent to $175.2 billion. Defense new orders for capital goods in March increased $3.8 billion or 48.4 percent to $11.6 billion. Shipments increased less than $0.1 billion or 0.1 percent to $10.0 billion. Unfilled orders increased $1.6 billion or 1.1 percent to $150.2 billion. Inventories decreased $0.3 billion or 1.4 percent to $21.5 billion.

Revised February Data. Revised seasonally adjusted February figures for all manufacturing industries were: new orders, $453.8 billion (revised from $454.0 billion); shipments, $463.0 billion (revised from $462.8 billion); unfilled orders, $1,183.8 billion (revised from $1,184.0 billion); and total inventories, $634.1 billion (revised from $634.3 billion).