First gain after six monthly declines surprises economists
Demand for machinery and other capital goods rose in February, driving orders for durable goods up 3.4%, the Commerce Department reported Wednesday.
The unexpected increase in orders for big-ticket items marked the first increase after six straight monthly drops, an indication that domestic demand may be bottoming.
Economists were caught flat-footed. Analysts surveyed by MarketWatch had been looking for total orders to fall 1.2%.
The monthly durable-goods figures, although extremely volatile, are seen as key leading indicators for tracking the path of economic growth.
Offsetting the gain in February somewhat was a sharp downward revision to orders in January.
The government said that orders for durable-goods fell a revised 7.3% in January, much worse than the previous estimate of a 4.5% decline.
But the gain in February did not seem to be a fluke or due to one factor. Many sectors posted gains.
Orders for capital goods -- the kind of equipment businesses need to increase or modernize their productive capacity - jumped 11% in February after a 14.8% decline in January.
Machinery orders rose 13.5% in February, the biggest gain in just under five years.
The sector includes construction equipment, turbines, industrial machinery, and oil-drilling equipment. It has been weak for the past year, and was down 26% in the past year.
Transportation orders rose a surprising 2.0% in February. This follows an 11.9% drop in the previous month.
The sector was helped by a sharp increase in defense aircraft. Orders for autos and commercial airliners were down sharply.
Excluding transportation goods, February's orders rose 3.9%, the most since August 2005.
Electronics orders rose 1.6%.
Shipments of durable goods fell 0.5% for last month. This is the seventh straight monthly decline. Shipments of semiconductors fell 21.2% in February.
Inventories of durable goods fell 0.9% on the month.
February details
Orders for core capital equipment -- that is, nondefense, nonaircraft capital equipment - rose 6.6%. Shipments rose 0.6%.
Orders for primary metals decreased 0.6%, while shipments fell 1.4%.
Orders for fabricated metals rose 1.5%. Shipments dropped 0.5%.
