Manufacturing Equipment

Orders for Capital Equipment in March Ease Unexpectedly

While the setback may simply represent a pause in investment, businesses may be somewhat hesitant to spend as they assess U.S. trade policy following the implementation of tariffs on steel and aluminum.

Orders placed with U.S. factories for business equipment eased unexpectedly last month after a smaller February advance, indicating a more moderate pace of capital spending, a Commerce Department report showed on April 26.

Non-military capital goods orders excluding aircraft fell 0.1%  after estimates were that it would increase 0.5%. In February the figure was up  1.4%.

Shipments of those goods, which are used to calculate gross domestic product, decreased 0.7% (estimated to be up 0.3%).  The decline in shipments of non-defense capital goods excluding aircraft was the largest since May 2016 and indicates business spending ended the first quarter on a weak note. Some economists may trim their tracking estimates for growth during the period. The Commerce Department will issue its advance estimate of first-quarter GDP on April 26.

While the setback may simply represent a pause in investment, businesses may be somewhat hesitant to spend as they assess U.S. trade policy following the implementation of tariffs on steel and aluminum.

At the same time, favorable tax policies, stable global growth and rising capacity constraints remain supportive to increased investment. Bookings for all durable goods, items meant to last at least three years, jumped 2.6% following an upwardly revised 3.5% gain

Other Highlights:

--Orders for machinery fell 1.7%, the most since April 2016.

--Bookings for computers and related products dropped 2.6%.

--Commercial aircraft orders jumped 44.5% after a 39.1% increase.

--Excluding transportation equipment, a volatile category, durable goods orders were essentially unchanged after a 0.9% increase.

--Orders for motor vehicles and parts edged up 0.1%.

--Durable-goods inventories rose 0.1%.

--Defense capital-goods orders increased 0.9 %.

By Katia Dmitrieva

 

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