BLBG:Orders for Durable Goods in U.S. Increase More Than Forecast
Orders for U.S. durable goods climbed more than forecast in February, propelled by automobiles and a rebound in commercial aircraft.
Bookings for goods meant to last at least three years rose 5.7 percent, the most since September, after a 3.8 percent drop the prior month, a Commerce Department report showed today in Washington. The median forecast of 80 economists surveyed by Bloomberg called for a 3.9 percent advance. Figures on capital goods pointed to a pickup in business spending this quarter.
Gains in auto and home purchases may keep benefiting manufacturers from 3M Co. (MMM) to United Technologies Corp. (UTX), leading to increases in output that are giving the economy a lift. Additionally, business investment in new equipment is picking up as companies look past the budget negotiations in Washington and focus on expanding capacity as demand improves.
“We expect a decent acceleration in business spending,” Bricklin Dwyer, an economist at BNP Paribas in New York, said before the report. “The underlying momentum in the U.S. economy is looking fairly resilient. That’s a good reason for companies to put their money to work.”
Estimates for durable goods in the Bloomberg survey ranged from a drop of 0.1 percent to a 6.5 percent gain.
The data were boosted by a 95.3 percent surge in bookings for commercial aircraft, according to the Commerce Department’s report. Boeing Co., the Chicago-based aerospace company, said it received orders for 179 aircraft in February, up from two in January.
Auto Sales
Demand for autos also contributed to the gains as bookings climbed 3.8 percent last month, the most since July. Cars and light trucks sold at a 15.3 million annual rate in February after a 15.2 million pace the prior month, Ward’s Automotive Group data showed.
Excluding demand for transportation equipment, which is often volatile, orders decreased 0.5 percent in February, the first decline in six months. January’s gain was revised up to 2.9 percent from a prior estimate of 2.3 percent.
February ex-transportation bookings were projected to rise 0.6 percent, according to the Bloomberg survey median.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications gear, decreased 2.7 percent, the most since July, after jumping 6.7 percent the previous month.
Investment Pickup
Shipments of those goods, used in calculating gross domestic product, climbed 1.9 percent after falling 0.7 percent in January, less than previously estimated. Sales of the products were up at a 7.8 percent annualized pace in February over the past three months, compared with a 5.1 percent gain in December, pointing to a pickup in business spending this quarter.
3M, the St. Paul, Minnesota-based maker of products ranging from Scotch tape to dental braces, is among companies saying growth in the U.S. will help cushion weakness in markets like Europe, especially in consumer electronics.
“We’re operating pretty steady in the U.S. and Latin America,” David Meline, chief financial officer, said at a March 21 conference. “In Asia, it’s more mixed. Western Europe continues to have a number of challenges.”
One drawback to future gains may be the automatic, across- the-board government spending cuts that began taking place on March 1 as part of the 2011 deal to increase the U.S. debt limit.
‘Greatest Danger’
The “greatest danger” to growth is tighter fiscal policy, Federal Reserve Bank of New York, President William C. Dudley said yesterday in a speech to the Economic Club of New York.
While cuts in U.S. military spending may trim its profits, United Technologies, the maker of Pratt & Whitney jet engines and Otis elevators, said it expects the expansion will remain intact.
“The U.S. economy is better and it is going to continue to get better,” Gregory Hayes, chief financial officer at Hartford, Connecticut-based United Technologies, said at a March 14 analyst meeting. “We’ve got another year-and-a-half or so probably of low interest-rate environment, which we could hope to capitalize on.”
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
