New orders for durable goods fell sharply in March, the latest economic metric to prove somewhat disconcerting. In all, such orders for long-lived products ranging from aircraft, to automobiles, to appliances, and computers fell by 5.7%. That was a far worse showing by this volatile series than had been forecast. Expectations had been for a 2.9% decline. The decrease in March was the second in three months and followed a downwardly revised 4.3% gain in February. Initially, the February estimate had been a 5.6% increase
Meanwhile, excluding transportation, which takes in such high-priced and volatile items as airplanes and cars, orders decreased by 1.4%. Likewise, excluding defense-related goods, the decline was 4.7%. In all, transportation equipment, which also fell for the second time in three months so far this year, plummeted by 15.0% last month. Much of the setback here was attributable to notable declines in nondefense aircraft and parts.
Also, orders for nondefense capital goods plunged by 10.6% in March. This is a key category, as capital spending is a key economic engine and one that often takes up the slack in a business expansion's maturing phases. Thus, if the economy is not going to get a lift from this late-cycle sector, there may well be some sloppiness ahead on the business front in the coming months.
As to some individual components of the overall report, manufacturing orders fell rather sharply, giving up 7.8% last month. Also retreating were orders for both primary and fabricated metals, which were off by 3.0% and 1.5%, respectively. On the other hand, orders perked up for computers and communications equipment and for motor vehicles and parts, although this latter category saw just incremental strength.
Overall, though, this was a disconcerting report, and although it was not a game changer, it did suggest further that the first quarter, which likely produced a much better economic showing than the three months preceding it, still ended on a soft note. Unfortunately, this weaker trend appears to be continuing in the current period. At the time of this article's writing, the author did not have positions in any of the companies mentioned.