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Durable Goods Orders Rise Sharply

(3/28/2013)

The Commerce Department announced this week that durable goods orders increased 5.7% in February, marking the largest jump in five months. The rise in durable goods orders is viewed by analysts as another positive step for the U.S. economy as it looks to recover from a sluggish 2012 fourth quarter. The newly-released Commerce Department data also supports a recent report from The Institute for Supply Management (ISM). The ISM's latest index showed U.S. manufacturing activity grew in February at the fastest pace since June of 2011.

Orders for transportation-related equipment (up 21.7% last month) were mostly responsible for pushing durable goods higher, government officials said. Demand for civilian aircraft rose 95% as Boeing alone received orders for 179 planes. Defense aircraft orders also contributed to the overall gains, rising 7.6%. Core capital shipments rebounded as well, advancing 1.9%, while orders for motor vehicles and parts increased 3.8%, the best monthly gain in nearly a year.

Most economists had predicted orders for durable goods – which are expected to last for at least three years – would rise only slightly in February, following a 3.8% decrease in orders in January. Despite the uneven start to durable goods orders in 2013, the averaged numbers still outpace those recorded near the close of last year by around 5%.

The only reason for pause from the latest data, economists suggest, is a drop in orders that signal company investment plans. A gauge of planned business spending fell unexpectedly after an uptick in January.



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