US durable goods orders rebound in February

By Thomson Reuters Mar 26, 2024 | 7:46 AM

WASHINGTON (Reuters) – Orders for long-lasting U.S. manufactured goods increased more than expected in February, while business investment on equipment appeared to improve in the first quarter.

Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rose 1.4% last month amid increases in transportation equipment and machinery orders, the Commerce Department’s Census Bureau said on Tuesday.

Data for January was revised lower to show orders plummeting 6.9% instead of 6.2% as previously reported. Economists polled by Reuters had forecast durable goods orders rising 1.1%.

Manufacturing remains constrained by higher interest rates, which have curbed demand for goods. But the outlook for the sector, which accounts for 10.3% of the economy, is steadily improving amid expectations that the Federal Reserve will start cutting rates this year.

A survey from the Institute for Supply Management this month showed manufacturers fairly upbeat in March about sales and business conditions. Factory output rebounded in February.

The U.S. central bank has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range since March 2022.

Nondefense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% in February after a falling 0.4% in the prior month.

These so-called core capital goods orders were previously reported to have been unchanged in January. Core capital goods shipments fell 0.4% after rising 0.8% in January.

Nondefense capital goods orders advanced 4.4%, while shipments rose 2.7% after declining 3.0% in January. Shipments of these goods go into the calculation of the business spending on equipment component in the gross domestic product report.

Business spending on equipment contracted in the fourth quarter. It has declined in four of the last five quarters.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)