Durable Orders Rebound Is Stronger Than Expected

By John S. McClenahen New orders for manufactured durables -- appliances, airplanes and other goods designed to last at least three years -- increased 2.5% to $183.8 billion last month, the U.S. Commerce Department reported on March 24. The percentage increase was significantly above the 1.5% economists generally expected and stands in sharp contrast to the 2.7% decrease in durable goods new orders in January. "Importantly, new orders for nondefense capital goods, a good proxy for business investment, rose a sizable 2.9% last month," says David Huether, chief economist at the National Association of Manufacturers, Washington, D.C. "This is the fourth increase in the past six months and shows that the rebound in investment that began in the second quarter of last year may even be accelerating." David A. Rosenberg, chief North American economist at Merrill Lynch & Co., New York, injects a note of caution, however. He points out that a 9.9% surge in new orders in transportation accounted for all the gain in durable orders in February; indeed, without transportation, new orders for manufactured durables were down 0.3% last month, he emphasizes.

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