Airplanes Boost U.S. Durable-Goods Orders -- Update
24 March 2017 - 3:21PM
Dow Jones News
By Ben Leubsdorf
U.S. factory demand was boosted by big-ticket aircraft purchases
in February for the second straight month, while a measure of
future business investment in new equipment was largely stable.
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 overall orders last month. For January, headline
orders were revised up to a 2.3% increase.
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 the transportation segment, orders
rose a modest 0.4% in February and 0.2% in January.
A closely watched proxy for coming 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 good news is that core orders seem to be on a steady
uptrend," said Stephen Stanley, chief economist at Amherst Pierpont
Securities, in a note to clients. "The less-good news is that the
trajectory of the uptrend is not especially exciting."
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,
according to Federal Reserve data, and a key private-sector gauge
of manufacturing activity produced by the Institute for Supply
Management 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."
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
(END) Dow Jones Newswires
March 24, 2017 11:06 ET (15:06 GMT)
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