The Census Bureau said that new durable goods orders rose a strong 2.2 percent in February, recovering from steep declines in both December and January. Much of the recent decreases were weather-related with severe winter conditions hampering sales and shipments. In February, the largest rebounds came in the transportation sector, with new orders for motor vehicles and parts (up 3.6 percent), nondefense aircraft and parts (up 13.6 percent), and defense aircraft and parts (up 21.1 percent) increasing significantly.
Excluding transportation, new orders were up just 0.2 percent, suggesting some continued softness in the broader manufacturing sector beyond autos and aircraft. The sector-by-sector data are mostly mixed. Increased sales in primary metals (up 1.8 percent), other durable goods (up 1.1 percent), computer and electronic products (up 0.4 percent), and fabricated metal products (up 0.3 percent) were somewhat offset by declines for machinery (down 1.5 percent) and electrical equipment and appliances (down 0.9 percent).
On a year-over-year basis, new durable goods orders excluding transportation have risen 1.5 percent, indicating slow-but-modest growth, up from $155.6 billion in February 2013 to $157.9 billion in February 2014. Ideally, we would like to see a much faster pace for new orders, preferably around 3 percent or so.
Meanwhile, durable goods shipments have risen 3.4 percent from $226.3 billion to $234.0 billion over the past 12 months. In February, shipments increased 0.9 percent, beginning to counterbalance the decreases of 1.7 percent and 0.6 percent observed in December and January, respectively. If we were to exclude transportation, shipments would have fallen by 0.7 percent in February, with reduced aircraft orders lowering the headline figure.
Looking at the shipments data for February, the largest increases were seen in the motor vehicles and parts (up 3.9 percent), machinery (up 1.6 percent), other durable goods (up 1.4 percent), and fabricated metal products (up 1.1 percent) sectors. On the other hand, there were notable declines for defense aircraft and parts (down 6.2 percent), nondefense aircraft and parts (down 5.3 percent), computer and electronic products (down 1.3 percent), electrical equipment and appliances (down 0.6 percent).
Chad Moutray is the chief economist, National Association of Manufacturers.
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