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U.S. Durable-Goods Orders Rose Less Than Forecast in March

Orders for durable goods rose less than forecast in March as demand for automobiles, fabricated-metal products and machinery all declined, Commerce Department data showed Thursday.

Key Points

  • Bookings for goods meant to last at least three years rose 0.7 percent (forecast was 1.3 percent rise) after a 2.3 percent February advance that was higher than previously estimated
  • Excluding transportation-equipment demand, which is volatile, orders fell 0.2 percent, the first decline since June, after a 0.7 percent rise
  • Orders for non-military capital goods excluding aircraft rose 0.2 percent (median projection was 0.5 percent gain)
  • Shipments of those non-defense, non-aircraft capital goods, which are used to calculate gross domestic product, rose 0.4 percent last month after a 1.1 percent increase in February

Big Picture

The figures indicate that the slowdown in auto demand from consumers and tepid business investment weighed on manufacturers and sapped some economic momentum at the end of the first quarter. Traction in tax-reform legislation, following the Trump administration’s release of a plan this week, might hearten businesses that have long delayed spending amid tighter regulations since the last recession. While figures due Friday may show GDP growth of around 1 percent in the first three months of the year, economists expect a rebound from that pace.

Economist Takeaways

“We remain watchful that capex growth could be undermined if companies become increasingly concerned about the timing of legislation on tax reform,” NatWest Markets economists Kevin Cummins and Michelle Girard wrote in a note before the report. “For now, prospects for business investment still seem fairly healthy,” including strong readings in regional manufacturing surveys from the Philadelphia and New York Federal Reserve banks.

Other Details

  • Orders for motor vehicles and parts were down 0.8 percent in March; industry data showed March car sales eased to the slowest pace since February 2015
  • Orders for fabricated metal products fell 0.8 percent after a 0.1 percent rise; machinery orders dropped 0.2 percent following a 0.4 percent gain
  • Orders for computers and electronic-products declined 0.2 percent
  • Bookings for civilian aircraft and parts rose 7 percent in March; defense capital-goods orders jumped 12.2 percent

— With assistance by Jordan Yadoo

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