New Durable Goods Orders Rebounded, Up 3.1 Percent in February and 6.9 Percent Year-Over-Year

The Census Bureau said that new durable goods orders rebounded, up 3.1 percent in February after falling by 3.5 percent in January. Much of that volatility stemmed from shifts in aircraft and parts sales, which can have large swings from month to month. The increase in February was also buoyed by stronger motor vehicles and parts orders (up 1.6 percent), and with solid gains in aircraft and automobiles, transportation equipment orders jumped 7.1 percent in February. Excluding transportation equipment, new durable goods orders increased 1.2 percent in February.

New durable goods orders have trended strongly higher over the course of the past 12 months, soaring 6.9 percent since February 2017. One of the more important measures in this release is new orders for core capital goods (or nondefense capital goods excluding aircraft), which can often be seen as a proxy for capital spending in the U.S. economy. In February, new orders for core capital goods were up 1.8 percent, but like the headline number above, the year-over-year pace was a very healthy 8.0 percent.

Looking more closely at the various durable goods sectors in February, the data were mostly higher. In addition to transportation equipment, there were also increased sales for primary metals (up 2.7 percent), electrical equipment and appliances (up 2.6 percent), machinery (up 1.6 percent), other durable goods (up 0.9 percent) and fabricated metal products (up 0.8 percent). The lone major category with reduced orders for the month was computers and electronic products, which edged down by 0.2 percent in February.

Meanwhile, durable goods shipments increased 0.9 percent in February, or with transportation equipment excluded, shipments rose by 1.0 percent. Much like the new orders data described above, shipments have trended convincingly higher over the past year. Since February 2017, durable goods shipments have risen at solid rates, up 6.8 percent, with year-over-year growth of 7.4 percent when transportation equipment shipments were excluded. In addition, shipments of core capital goods have also improved mightily over the past 12 months, up 9.0 percent year-over-year.

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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