New Durable Goods Pulled Back Again in February after Rebounding Somewhat in January

The Census Bureau said that new durable goods orders pulled back again in February after rebounding somewhat in January. Sales of new durable goods declined from $235.9 billion in January to $229.4 billion in February, a decrease of 2.8 percent. Overall, demand remains quite soft, with the sector challenged by global headwinds and lingering anxieties in the economic outlook. Order volumes have been highly volatile from month-to-month over the course of the past year, with sales trending lower since peaking in 2015 at $241.0 billion in July. Despite that steep decline over the past 7 months, year-over-year growth for new durable goods orders was 1.8 percent, up from $225.3 billion in February 2015. Still, much of that growth stemmed from transportation equipment (up 7.1 percent year-over-year). Excluding transportation, year-over-year growth would have been down 0.5 percent.

Motor vehicles and parts (up 1.2 percent) were one of the few bright spots in February in the durable goods orders data, with computers and related products (up 1.3 percent) also positive. Other segments were mostly lower. This included declines for electrical equipment and appliances (down 2.8 percent), machinery (down 2.6 percent), communications equipment (down 2.3 percent), fabricated metal products (down 1.2 percent) and primary metals (down 0.1 percent). Defense and nondefense aircraft sales were also off sharply in February, swinging lower after strong gains were experienced in January. Aircraft orders can vary widely with each report as sales are often released around major air shows.

Meanwhile, durable goods shipments decreased 0.9 percent in February, continuing a trend of being up one month only to fall the next. Shipments had risen 1.5 percent in January. The sector-by-sector breakdown was similar to the new orders analysis described above, with motor vehicles and parts (up 0.5 percent) and communications equipment (up 2.0 percent) experiencing positive growth for the month. At the same time, the largest declines were in the nondefense aircraft and parts (down 8.0 percent), defense aircraft and parts (down 2.6 percent), electrical equipment and appliances (down 2.0 percent) and machinery (down 1.3 percent) sectors.

On a year-over-year basis, durable goods shipments increased by 0.5 percent. However, much like the new orders data discussed above, shipments declined by 2.0 percent when transportation equipment were excluded.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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