Sharp drop in US durable goods orders for February points to sluggish investment
By Alexander Bueso
Date: Tuesday 02 Apr 2019
(Sharecast News) - US durable goods orders fell more sharply than expected last month, amid a big decline in those for aircraft and parts.
According to the Department of Commerce, in February total durable goods orders shrank at a month-on-month pace of 1.6% to reach $250.6bn (consensus: -1.2%).
Orders for non-defence aircraft and parts were especially weak, dropping by 31.1% versus January to $10.2bn.
However, excluding those for transportation equipment, orders edged up by 0.1% on the month to $164.6bn, although that too fell short of economists' forecasts (consensus: 0.3%).
Excluding defence, orders weakened at a month-on-month pace of 1.9% to hit $236.4bn.
Orders for non-defence capital goods, excluding aircraft, widely considered to be a lead indicator for business investment, slipped by 0.1% month-on-month to $68.87bn and were 2.6% higher versus a year ago.
Commenting on Tuesday's figures, Mickey Levy at Berenberg Capital Markets said: "The February Durable Goods Report reflected continued sluggish momentum in business equipment investment and soft future demand for manufactured goods.
"[...] Taken together, activity in durable goods industries remains sluggish, but there are some indicators pointing to a turnaround: 1) if the improvement in China manufacturing PMIs is sustained, that would lift global trade and industrial activity and sentiment; and 2) if oil prices stabilize near current levels, demand for oil field and gas field machinery would receive a boost."
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