Orders for U.S. Capital Equipment in March Ease Unexpectedly

Katia Dmitrieva

27 Apr 2018, 12:45 AM IST

(Bloomberg) -- 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 Thursday.

Highlights of Durable Goods (March)
Non-military capital goods orders excluding aircraft fell 0.1% (est. up 0.5%), after rising 0.9% (prev. 1.4%) in February; Figure is proxy for business investment Shipments of those goods, which are used to calculate gross domestic product, decreased 0.7% (est. up 0.3%); February revised down to a 1% gain (prev. up 1.4%) Bookings for all durable goods, items meant to last at least three years, jumped 2.6% (est. 1.6% gain) following an upwardly revised 3.5% gain

Highlights of Durable Goods (March)

Non-military capital goods orders excluding aircraft fell 0.1% (est. up 0.5%), after rising 0.9% (prev. 1.4%) in February; Figure is proxy for business investment
Shipments of those goods, which are used to calculate gross domestic product, decreased 0.7% (est. up 0.3%); February revised down to a 1% gain (prev. up 1.4%)
Bookings for all durable goods, items meant to last at least three years, jumped 2.6% (est. 1.6% gain) following an upwardly revised 3.5% gain

Key Takeaways

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 Friday.

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.

The Commerce Department’s report showed orders cooled for machinery, computers and electrical equipment.

Orders for U.S. Capital Equipment in March Ease Unexpectedly

Other Details

Orders for machinery fell 1.7 percent, the most since April 2016
Bookings for computers and related products dropped 2.6 percent
Commercial aircraft orders jumped 44.5 percent after a 39.1 percent increase
Excluding transportation equipment, a volatile category, durable goods orders were essentially unchanged after a 0.9 percent increase
Orders for motor vehicles and parts edged up 0.1 percent
Durable-goods inventories rose 0.1 percent
Defense capital-goods orders increased 0.9 percent

--With assistance from Jordan Yadoo

To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net.

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle