Economy

Durable Goods Orders Rebound Less Than Expected

April 26, 2021

Orders for durable goods—products expected to last three years or more—recovered partially in March, increasing 0.5% after dipping 0.9% in February, said the Commerce Department on Monday. Orders for the month totaled $256.3 billion, increasing for the 10th time in the last 11 months, but at a much lower rate than the 2%-plus uplift expected by economists.

The softness in orders was due to a sharp decline in orders for commercial (-46.9%) and military aircraft (-20.2%). Automotive orders rose 5.5% after a 9% decline in March despite automakers still struggling with a semiconductor shortage. Combined orders in the transportation category fell 1.7%.

Core capital goods, orders excluding defense and transportation and considered a proxy for future investment, rose 0.9% after an 0.8% decline in March, but were 10.4% higher than a year ago.

Demand for manufactured products is booming, but shortages and high pricing for key raw materials, along with lack of skilled labor, continues to challenge the manufacturing industry.

As the economy reopens more broadly, industrial activity will continue to be propelled by strong tailwinds including large fiscal stimulus, buoyant demand and strong corporate profits,” said Lydia Boussour, lead U.S. economist at Oxford Economics. “These should more than outweigh ongoing headwinds from stretched supply chains and the global semiconductor shortage.”

The March advance report on durable goods manufacturers’ shipments, inventories and orders from the U.S. Census Bureau:

New Orders

New orders for manufactured durable goods in March increased $1.4 billion or 0.5 percent to $256.3 billion. This increase, up 10 of the last 11 months, followed a 0.9 percent February decrease. Excluding transportation, new orders increased 1.6 percent. Excluding defense, new orders increased 0.5 percent. Fabricated metal products, up six of the last seven months, led the increase by $1.2 billion or 3.6 percent to $35.4 billion.

Shipments

Shipments of manufactured durable goods in March, up six of the last seven months, increased $6.4 billion or 2.5 percent to $257.0 billion. This followed a 3.6 percent February decrease. Transportation equipment, also up six of the last seven months, led the increase by $3.7 billion or 4.8 percent to $82.1 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in March, up three consecutive months, increased $4.4 billion or 0.4 percent to $1,087.7 billion. This followed a 0.9 percent February increase. Fabricated metal products, up 11 consecutive months, led the increase by $2.3 billion or 2.8 percent to $83.0 billion.

Inventories

Inventories of manufactured durable goods in March, up two consecutive months, increased $4.2 billion or 1.0 percent to $431.8 billion. This followed a 0.7 percent February increase. Transportation equipment, also up two consecutive months, led the increase by $2.1 billion or 1.4 percent to $149.0 billion.

Capital Goods

Nondefense new orders for capital goods in March decreased $3.7 billion or 4.7 percent to $75.9 billion. Shipments increased $1.4 billion or 1.9 percent to $75.8 billion. Unfilled orders increased $0.1 billion or were virtually unchanged at $592.3 billion. Inventories increased $0.7 billion or 0.4 percent to $192.7 billion.

Defense new orders for capital goods in March increased $0.5 billion or 3.8 percent to $14.1 billion. Shipments decreased less than $0.1 billion or 0.2 percent to $13.0 billion. Unfilled orders increased $1.1 billion or 0.6 percent to $181.4 billion. Inventories decreased less than $0.1 billion or were virtually unchanged at $21.4 billion.

Revised February Data

Revised seasonally adjusted February figures for all manufacturing industries were: new orders, $507.1 billion (revised from $505.7 billion); shipments, $502.9 billion (revised from $502.4 billion); unfilled orders, $1,083.2 billion (revised from $1,082.3 billion) and total inventories, $702.5 billion (revised from $702.4 billion).