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First Cut: February new orders for durable goods decline on transportation, but up excluding that component

The February data on new orders for durable goods showed a 1.6% decline that was due to a 4.8% drop in transportation. Excluding transportation, orders managed to eke out a 0.1% increase. The February decline was expected and should not be too concerning to markets.

New orders for nondefense aircraft fell 31.1% in February, although defense aircraft was up 2.5% after the Aero India expo. Orders for motor vehicles edged down 0.1%.

“Core” orders for durables — new orders less civilian aircraft capital goods and defense capital goods — were up 0.5% in February. This calculation typically sees a firmer month after a softer one and January’s core orders were flat.  Nonetheless, even with the reset in manufacturing activity in the final months of 2018, the underlying trend is still modestly positive.

Unfilled orders were down 0.3% in February. It will not be known until Boeing publishes its March data on commercial aircraft orders, but it is possible that some of the decline was due to cancelled orders in the wake of the problems with the 737 MAX aircraft. Unfilled orders for nondefense aircraft was down 0.6% in February. Unfilled defense aircraft orders were down 0.1%, but that seems more to be part of a trend for reduced orders in light of some drawdowns in military commitments overseas.

Inventories were up 0.3% in February, a sixth month in a row of increases. As long as shipments persist in rising as well, replenishing inventories will be a positive. In February, shipments were up 0.2%.


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