A Surge in Transportation Orders Advances Durable Goods in February

Andrew Klips |

Department of CommerceAs with the past few months, the volatile aircraft and defense segments made a large impact on durable goods orders in February as orders for Boeing Co. (BA) aircrafts jumped again during the month after contracting in January. However, excluding transportation, durable goods slumped for the first time in six months.

The Commerce Department reported Tuesday that new orders for durable goods, items from small appliances to locomotives meant to last more than three years, increased during February by 5.7 percent, or $12.4 billion, to a seasonally adjusted $232.1 billion. Outside of a revised 3.8 percent decrease in January (originally estimated a -4.9%), durable goods orders have increased for the past six months.

The overall rise in new orders beat economist predictions of an increase of 3.8 percent.

Excluding transportation, new orders fell by 0.5 percent in February, marking the first monthly decrease since August. Excluding transportation in the month prior, new orders rose by 2.9 percent.

The transportation segment, known for large monthly swings, has risen in two of the past three months. In February, transportation equipment orders swelled by 21.7 percent to $74.4 billion, reversing course from a 19.8 percent decline in January. Orders for non-defense aircraft in February skyrocketed 95.3 percent from January to $18.34 billion, after falling 24 percent in January from December. Boeing had only two orders for aircraft in January, but orders for 179 in February.

Excluding defense, new orders increased by 4.5 percent.

So-called “core” durable goods orders, those that don’t include either transportation or defense, fell by 2.7 percent, the sharpest drop since July, after rising a revised 6.7 percent in January. The February decline was greater than the 1.2 percent drop economists expected.

New orders for network communications equipment (-7.6%) paced the laggards for the month, followed by fabricated metals (-4.4%) and machinery (-2.2%).

Excluding transportation, orders for capital goods, items that are used in manufacturing of other goods, decreased in February by 2.7 percent, after a 6.7 percent increase in January. Non-defense capital goods orders, however, rose 10.0 percent during the month, it’s largest increase in five months.

Shipments of core capital goods, an item used in calculating gross domestic product, increased by 1.9 percent in February, following a decrease of 0.7 percent in the month earlier.

Because of the monthly volatility of durable goods, economists tend to focus more on long-term trends. Total durable goods orders and core durable goods orders in the past 12 months are up by 0.6 percent and 0.7 percent, respectively.

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