New Durable Goods Sales Rebounded Somewhat in March, but Weaker Than Expected

The Census Bureau said that new durable goods orders increased by 0.8 percent in March, rebounding somewhat after the 3.1 percent decline seen in February. This was weaker-than-expected, with a consensus expecting a gain of 1.8 percent. Sales of new durable goods orders rose from $228.9 billion in February to $230.7 billion in March. 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. On a year-over-year basis, new durable goods orders have fallen 2.5 percent, down from $236.7 billion in March 2015. Even with transportation equipment sales excluded, year-over-year growth declined by 1.4 percent, with orders down 0.2 percent for the month, highlighting the broad-based softness of demand for durable goods over the past 12 months.

Looking more closely at the March new orders data, some of the larger declines were seen in the computers and related products (down 6.6 percent), nondefense aircraft and parts (down 5.7 percent), electrical equipment and appliances (down 3.0 percent), motor vehicles and parts (down 3.0 percent) and fabricated metal products (down 1.8 percent). In contrast, there were also several segments that notched gains in March, including primary metals (up 0.8 percent), communications equipment (up 0.7 percent), other durable goods (up 0.6 percent) and machinery (up 0.5 percent). The highly-volatile defense aircraft sales numbers soared 65.7 percent in March, but this followed an increase of 97.7 percent in January and a decrease of 30.4 percent in February. New orders for core capital goods (or nondefense capital goods excluding aircraft) were unchanged in March, but down 1.7 percent year-over-year.

Meanwhile, durable goods shipments were off by 0.5 percent in March, declining for the second straight month. Shipments were down by 1.0 percent in February. The strongest growth for the month occurred in the defense aircraft and parts (up 6.5 percent), other durable goods (up 0.7 percent), nondefense aircraft and parts (up 0.6 percent), computers and electronic products (up 0.6 percent) and machinery (down 0.5 percent). These increases were offset, though, by declines for motor vehicles and parts (down 3.0 percent), electrical equipment and appliances (down 1.4 percent), fabricated metal products (down 0.3 percent) and primary metals (down 0.2 percent). Excluding transportation, durable goods shipments decreased by 0.8 percent, with core capital goods shipments up 0.3 percent.

The year-over-year data were similar to the new orders analysis discussed above, with each highlighting ongoing weaknesses in the sector. Since March 2015, durable goods shipments have fallen 1.5 percent, with a decline of 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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