Durable Goods Orders

          

Orders placed with US factories for business equipment barely rose in March, suggesting firms are growing cautious amid uncertainty surrounding tariffs and tax policy.

The value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, increased 0.1% last month after a revised 0.3% decline in February, Commerce Department figures showed Thursday. Shipments of core capital goods rose at a slower pace.

Bookings for all durable goods — items meant to last at least three years  — surged 9.2%, the most since July on a 139% jump in orders for commercial aircraft.

The moderation in capital goods orders suggests companies were growing cautious about investing in their operations ahead of President Donald Trump’s early-April announcement of sweeping tariffs. A fluid trade-policy is fueling uncertainty elevated, leaving businesses’ capital spending plans in limbo while also raising concerns about the economic outlook.

In the meantime, while business leaders and investors wait for the administration to wrap up negotiations on a number of bilateral trade deals, lawmakers on Capitol Hill are still working on tax-cut legislation.

Metric                                                                       Actual        Estimate

Durable goods orders                                           +9.2%      +2.0%

Capital goods orders excl. defense & aircraft           +0.1%      +0.1%

Capital goods shipments, excl. defense & aircraft   +0.3%      +0.2%

Rather than orders that can be canceled, the government uses data on shipments as an input to gross domestic product, which reflects when a payment has been made. Core capital goods shipments rose 0.3% after a revised 0.7% gain.

Economists like to look at the core shipments figure for a cleaner sign of underlying sales since there are extremely long times between ordering commercial aircraft and military equipment and the actual shipment taking place.

Non-defense capital goods shipments including aircraft, which feed directly into the equipment investment portion of the gross domestic product report, dropped 1.9%, the most since October. The latest figure, dragged down by commercial aircraft, suggests a weak finish to the first quarter ahead of the government’s initial estimate of GDP next week.

After the durables report, the Federal Reserve Bank of Atlanta’s GDPNow forecast penciled in a 0.74 percentage point contribution from business equipment spending for the quarter, which would be the most in three years.

The Commerce Department’s report showed the increase in bookings for commercial aircraft, which are volatile from month to month, was the largest since July.

Boeing Co. said it received 192 orders in March, the most since the end of 2023 and up from 13 in the previous month. At the same time, China recently ordered its airlines not to take further deliveries of Boeing jets as the trade war escalates. 

Manufacturing surveys suggest tougher sledding ahead. S&P Global’s flash April factory index hovered near stagnation for a second month. A gauge of Philadelphia-area manufacturing tumbled nearly 39 points this month and showed the steepest contraction in two years.

Source: Mark Niquette, MSN