the republic logo

US durable goods orders post biggest gain in 8 months, but investment keeps heading south

bug
Share/Save/Bookmark

WASHINGTON — Purchases of long-lasting manufactured goods in March jumped by the largest amount in eight months, but a closer look at the details reveals that businesses kept pruning their investment plans in the face of a softening U.S. economy.

Orders to factories for durable goods rebounded 4 percent in March after a 1.4 percent decline in February, the Commerce Department reported Friday. The result was led by a big jump in demand for commercial aircraft. Outside of the transportation category, however, orders fell for a sixth straight month.

More worrying was a 0.5 percent drop in demand in a key category that serves as a proxy for future business investment. The retreat followed a 2.2 percent drop in February and marked the seven straight monthly decline.

"The report was yet another false positive that looks good in the headline but is eroding away underneath," said Michael Montgomery, U.S. economist with IHS Global Insight.

PHOTO: In this March 23, 2015 photo, an employee walks past a display of appliances at a Home Depot in Robinson Township, Pa. Orders for durable goods rebounded 4 percent in March after having fallen 1.4 percent in February, the Commerce Department reported Friday, April 24, 2015.  The result was led by a big jump in demand for commercial aircraft. Outside of the transportation category, orders were down for a sixth straight month.. (AP Photo/Gene J. Puskar)
In this March 23, 2015 photo, an employee walks past a display of appliances at a Home Depot in Robinson Township, Pa. Orders for durable goods rebounded 4 percent in March after having fallen 1.4 percent in February, the Commerce Department reported Friday, April 24, 2015. The result was led by a big jump in demand for commercial aircraft. Outside of the transportation category, orders were down for a sixth straight month.. (AP Photo/Gene J. Puskar)

U.S. manufacturers have been hurt by a labor dispute at West Coast ports that disrupted supply chains in the early part of the year. They were also hit with winter weather in many parts of the country that was harsh enough to disrupt production.

Moreover, manufacturers have been grappling with a sharp rise in the value of the dollar, which cuts into exports by making U.S. goods more expensive overseas. A stronger dollar also makes imports cheaper and more competitive in the United States.

Demand for commercial aircraft, a volatile category, jumped 30.6 percent in March after a 2.2 percent decline in February. Orders for motor vehicles rose 5.4 percent, and the overall transportation category expanded 13.5 percent. Excluding transportation, however, the weakness was widespread with orders down 0.2 percent.

Demand for primary metals such as steel edged down 0.2 percent, while orders for machinery dropped 1.5 percent. Demand for communications equipment fell 5.3 percent. Orders for computers and related equipment rose 11 percent in one of the few areas of strength in March.

Economists believe that overall economic growth slowed to between 1 percent and 1.5 percent in the January-March quarter. They are forecasting a rebound to growth of around 3 percent for the rest of this year.

Think your friends should see this? Share it with them!

Story copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


We also have more stories about:
(click the phrases to see a list)

Category:

Follow The Republic:

All content copyright ©2015 The Republic, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.