Airplanes Boost U.S. Durable-Goods Orders For Second Month
March 24 2017 - 9:00AM
Dow Jones News
By Ben Leubsdorf and Eric Morath
WASHINGTON--Demand for long-lasting factory goods rose in
February for the second straight month due to big-ticket orders for
civilian aircraft, while a measure of business investment in new
machinery and other equipment was largely stable in the early
months of 2017.
Orders for durable goods--products designed to last at least
three years, such as cars and refrigerators--increased 1.7% from
the prior month to a seasonally adjusted $235.39 billion in
February, the U.S. Commerce Department said Friday.
Economists surveyed by The Wall Street Journal had expected a
1.5% gain for orders last month. In January, headline orders were
up 2.3%, revised up from an earlier estimate of a 2% gain.
Last month's rise in orders reflected a 47.6% increase for
civilian aircraft and parts, following an 83.3% gain in January for
the volatile category. Excluding transportation, orders rose a
modest 0.4% in February and 0.2% in January.
A closely watched proxy for business spending on new equipment,
new orders for nondefense capital goods excluding aircraft, ticked
down 0.1% in February after edging up 0.1% in January.
Data can be volatile from month to month, but the broader trend
shows continued gradual improvement. Total durable-goods orders
were up 1.6% in the first two months of 2017 compared with the same
period a year earlier. Orders for nondefense capital goods
excluding aircraft rose 1.3% over the past two months compared with
January and February 2016.
The U.S. industrial sector has found steadier footing after a
weak stretch in 2015 and 2016, when falling oil prices squeezed the
domestic energy industry and a strong dollar restrained foreign
demand for U.S. exports.
Manufacturing production jumped in the early months of 2017 and
was up 1.2% in February from a year earlier, the Federal Reserve
reported last week. A private-sector gauge of manufacturing
activity, the Institute for Supply Management's purchasing managers
index, rose in February to its highest level since August 2014.
U.S. corporate spending on new machinery, buildings and other
capital investments also has firmed in recent months. A broad
measure, fixed nonresidential investment, rose modestly the past
three quarters following two straight quarterly declines in late
2015 and early 2016, according to Commerce Department data.
Still, overall economic growth appeared to slow over the winter
months. The Federal Reserve Bank of Atlanta's GDPNow model last
week estimated that gross domestic product expanded at a seasonally
and inflation-adjusted annual rate of 0.9% in the first quarter,
down from the fourth quarter's 1.9% GDP growth rate. Forecasting
firm Macroeconomic Advisers on Thursday estimated first-quarter
growth at 1.2%.
Gauges of U.S. business and consumer sentiment have surged since
last fall's presidential election. Some forecasters have raised
their estimates for U.S. growth in the coming years in expectation
of tax cuts and other measures under the new Trump administration.
Other economists remain cautious because the timing and details of
any policy changes are uncertain for now.
"I think it's fair to say that many of my colleagues and I note
a much more optimistic frame of mind among many, many businesses in
recent months," Fed Chairwoman Janet Yellen told reporters last
week. "But I'd say most of the businesspeople that we've talked to
also have a wait-and-see attitude, and are very hopeful that they
will be able to expand investment and are looking forward to doing
that, but are waiting to see what will happen."
The Commerce Department's durable-goods report can be accessed
at: https://www.census.gov/manufacturing/m3
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com and Eric Morath
at eric.morath@wsj.com
(END) Dow Jones Newswires
March 24, 2017 08:45 ET (12:45 GMT)
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