Orders to US factories for long-lasting manufactured goods fell in February with a key category that tracks business investment dropping by the largest amount since December. Tepid global markets, the dollar’s advance and a slump in commodity prices also have led overseas customers to pare bookings as manufacturing remains a weak spot of the economy. Demand for computers rose 1.3% while orders for communication equipment fell 2.3%.
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Weakness had been anticipated after an overall 4.9% gain in orders in January, which was to some extent a bounce-back from declines in late 2015.
The Commerce Department said orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, declined 2.8 per cent last month after a downwardly revised 4.2 per cent increase in January. The dollar rose against a basket of currencies after St. Louis Fed President James Bullard said another U.S. interest rate “may not be far off. ” Prices for U.S. Treasuries were mixed”. That could mean better news when the March data are reported.
Orders for durable goods were dismal in February – not a good sign for the USA economy.
Headline orders were dragged by a sharp drop in defense orders, accounting for 0.9%, with civilian aircraft orders also much lower that month, as flagged by Boeing.
For February, orders for machinery fell 2.6 percent while demand for appliances and other electrical equipment dropped 2.8 percent.
Core orders, which exclude automobiles, gas and building materials, fell 1.8% in the month compared to 0.5% expected. For the first two months of 2016, new durable goods orders were up 2.6 percent from a year ago. They were projected to fall 0.3%, according to the Bloomberg survey median.
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The drop in shipments in February could prompt economists to trim first-quarter GDP growth estimates, which are now around a 2 per cent annualised rate.
