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Aircraft Sales Weigh on US Durable Goods Orders

Feb. 27, 2013
Defense aircraft orders dropped 63.8% as the government tightened spending to reduce the deficit.

WASHINGTON -- New orders for durable goods in the United States fell sharply in January as aircraft orders plunged, government data released Wednesday showed.

After five straight months of gains, durable goods orders dropped 5.2% from December, when orders rose a revised 3.7%, the Commerce Department reported.

Excluding transportation orders, which can be volatile month-over-month, new durable goods orders were up 1.9%, almost double the increase in December.

The weakness came from sharp drops in aircraft orders, particularly a 63.8% plunge in defense aircraft as the government tightened spending to reduce the yawning deficit.

“The federal budget sequester undoubtedly played a part in lower military aircraft orders and the battery problem with the Boeing 787 aircraft likely had some role fewer civilian aircraft orders. In both cases, the several-year lead time for aircraft will not affect current activity, " said “Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI).

Orders for nondefense aircraft dropped 34%.

Primary metals and computer and electronic products industry orders also fell in January.

“ Importantly, however, orders for business machinery increased a large 13.5%,” Meckstroth added. “A key indicator for business equipment spending is orders for nondefense capital goods excluding aircraft. The indicator increased 6.3% in January and is a welcome sign that businesses are not completely put off by the political budget deadline gamesmanship in Washington. Business equipment spending growth is an important element in sustaining the economic expansion.”

Copyright Agence France-Presse, 2013, IW Staff

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