Orders for U.S. durable goods climbed less than forecast in March as demand for capital equipment remained weak, a sign that a diminished growth outlook is impeding investment.
Bookings for items meant to last at least three years rose 0.8% after a revised 3.1% slump a month earlier, data from the Commerce Department showed Tuesday. The median forecast in a Bloomberg survey called for a 1.9% advance. Orders for business equipment were little changed last month, also weaker than projected.
Businesses continue to grapple with soft global sales and middling U.S. consumer spending, which make it difficult to justify expanding plans for capital outlays. Scope for a pickup will be limited until demand accelerates and companies feel more confident that their investments will pay off.
“At best you’re treading water here,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York, whose forecast for business equipment orders was among the closest in the Bloomberg survey. “There is a general carving out of a bottom in the weakness that’s plagued the manufacturing space, but I don’t think we’re heading into a significantly more upbeat backdrop unless you start to see a firmer recovery in oil.”
Projections in the Bloomberg survey for all durable goods orders ranged from a 0.6% drop to a 3.7%. The February decline was revised from a previously reported 3% drop.
Bookings for non-defense capital goods excluding aircraft -- a proxy for business investment -- were projected to advance 0.6%. February orders for those goods were revised down to a 2.7% decrease from a previously reported 2.5% decline.
At best you’re treading water here."
— Jacob Oubina, a senior U.S. economist at RBC Capital Markets
Shipments of non-military capital goods excluding aircraft, which are used to calculate gross domestic product, increased 0.3% in March after declining 1.8% the month before.
Companies placed fewer orders for fabricated metals, computers and electrical equipment such as appliances.
The increase in orders for all durable goods was propelled by a rebound in bookings for military aircraft, a volatile category.
Orders for commercial aircraft declined 5.7% in March after sliding 26.6% a month earlier. The decrease last month was at odds with industry figures that showed a pickup.
Boeing Co., one of the world’s largest airplane makers, said it received 69 orders for planes last month, up from two the previous month. Industry data don’t always correlate with the government statistics on a month-to-month basis.
Excluding transportation equipment demand, which is often volatile from month to month, bookings for durable goods decreased 0.2% in March after dropping 1.3% a month earlier, the report showed. They were projected to rise 0.5%.
Orders for military capital goods surged 48.4% last month, the most since April 2014.
Durable goods inventories were little changed after a 0.3% decline, a sign companies are keeping stockpiles in line with tepid demand.
Manufacturers are in search of some stability after weakness in the U.S. oil patch and weak global economy routed the industry. Separate data from the Federal Reserve showed that factory output declined in March by the most in more than a year, as production of consumer goods and business equipment both fell.
The weakness helps explain a paring of factory workforces. The number of employees on manufacturing payrolls fell by 29,000 last month after an 18,000 drop in February. That marked the largest back-to-back declines since the two months ended in January 2010.