Analysts had expected new orders for key US-made capital goods to rise more than they did, in March, but that does not mean things are moving at an unwelcome pace. Since March posts the second straight month of increases in these shipments, analysts are now intimating that perhaps business investment has, in fact, accelerated in the first quarter of this year, in the middle of an energy sector that is still in recovery.
According to the United States Department of Commerce, Thursday, orders for non-defense capital goods—not including aircraft, which is a closely monitored metric for business plan spending—ticked up by 0.2 percent, last month. That might not seem like much but the revised expectation in February was up to 0.1 percent.
Basically, key capital good shipments increased by 0.4 percent after a massive 1.1 percent jump in February. Core capital goods shipments, of course, are an important component of calculating equipment spending for measuring the government’s gross domestic product.
Some economists had forecast a core capital goods growth of about 0.5 percent, last month, after only previously reporting a 0.1 percent drop. The modest increase in March, then, suggests that there may have been a loss of momentum within the manufacturing sector, cycling off a high of recent growth.
Last month, machinery orders slid about 0.2 percent, though shipments were up 0.7 percent. Primary metals orders also rose in March, which is also true for primary metals shipments. In addition, appliances and components, as well as electrical equipment, all increased, last month. Fabricated metal products and computers (and electronic products) all fell, last month.
Overall, durable goods orders last month—which range from aircraft to toasters (things intended to last at least three years—ticked up by 0.7 percent after the 2.3 percent surge, in February. Civilian aircraft orders showed a highly promising uptick of 7.0 percent this quarter, too.
Moving forward, analysts expect that business spending on equipment should have accelerated from the fourth quarter of last year at an annualized growth rate of 1.9 percent, which will likely be one of the few positive traits to examine when the government publishes its Q1 GDP estimates, this Friday. Long-lasting factory-made goods are forecast to jump 1.2 percent in March, after the 1.7 percent increase from February.