Just A 'Growth Pause' For U.S. Durables?

New orders for U.S. manufactured durables -- generally big-ticket goods such as airplanes and automobiles that are designed to last at least three years -- fell 2.8% in March to $194 billion, the U.S. Commerce Department reported on April 27.

In percentage terms, machinery and transportation equipment were the two categories registering the greatest declines, 7.6% and 7.8%, respectively. Within transportation equipment, new orders for defense aircraft and parts were down 35% and new orders for non-defense aircraft and parts were down 22.7%. New orders for motor vehicles and parts were down 2.2%.

"A reduction in transportation equipment can be traced to the rising price of gasoline and other fuels," says Daniel J. Meckstroth, chief economist at the Manufacturers Alliance/MAPI, an Arlington, Va.-based business research group. "The decline in machinery orders is more difficult to explain in light of high corporate profitability and increased utilization of facilities."

His bottom line: capital goods "hit a growth pause" in March. "The underlying fundamentals . . . are still positive and growth should resume shortly." That remains to be seen. March's decline in new orders for manufactured durables was the third consecutive monthly decline. And increasingly economists are lowering their expectations for U.S. GDP growth in the third and fourth quarters of this year.

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