New Orders for Durable Goods Leap 3%

The rise was driven by orders for transportation equipment, up 15.6%.

Driven by a surge in aircraft orders, new orders for big-ticket manufactured goods rose a surprisingly strong 3% in January, the Commerce Department reported on Feb. 25.

Orders for durable goods -- items such as planes, cars, refrigerators and computers expected to last at least three years -- rose to $175.75 billion, up from $170.57 billion in December.

It was the second consecutive increase in new orders, following a 1.9% rise in December.

The rise was driven by orders for transportation equipment, up 15.6%, that was led by nondefense aircraft and parts.

"The weakness and uncertainty of the nascent economic and manufacturing recovery was reflected in a disappointing report on demand for long-lasting manufactured goods in January," said Cliff Waldman, Manufacturers Alliance/MAPI Economist. "While total new orders increased a healthy 3% on top of nearly 2% in December, this was entirely due to volatile transportation orders.Excluding transportation demand, total new orders actually fell by 0.6%.

"The industry level data were mixed, indicative of a less than stable expansion. Machinery demand fell by nearly 10%, although it was up more than 5% from year-ago levels. Fabricated metals demand was flat.

"Further, it continues to be evident that business confidence in this economic recovery vacillates," he added. " New orders for non-defense capital goods, a proxy for the business equipment spending that is sensitive to business confidence in the economy, fell by nearly 3% after a similar increase in January. Strong but volatile manufacturing output in recent months reflects a large inventory restocking after the historic liquidation that was seen in late 2008 and early 2009. But recent indicators on employment and housing have been disconcerting and at a minimum show that the strength of the domestic economic recovery is less than certain. And on the global front, almost all of the strength is coming from Asia. Until the new expansion broadens both domestically and globally, a strong and sustained manufacturing recovery is questionable."

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