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First Cut: Factory orders for February decline on durables in spite of rise in nondurables

New orders for all factory goods declined 0.5% in February from January as orders for durable goods were down 1.6% (unrevised from advance report) and nondurables were up 0.6% in part on increases for petroleum and coal products (up 2.8%). Like the advance report on durable goods orders, the decline was in large part due to a 4.5% decrease for transportation that reflected lower orders for nondefense aircraft (down 31.1%) even though defense purchases of aircraft was up 3.3% after the Aero India expo.

“Core” durable goods orders were up 0.5%, unrevised from the advance report. Core durables are all orders less civilian aircraft and defense capital goods.

Unfilled orders were down 0.3% in February. It is possible that Boeing’s recent troubles with the 737 MAX aircraft were behind some of the 0.6% decline in nondefense aircraft and contributed to the overall decrease. On the other hand, shipments of goods were up 0.4% overall and up 0.2% for durables only. The calculation of shipments of capital goods excluding aircraft can serve as a proxy for business fixed investment in GDP. The year-over-year gain of 7.7% suggests that it remains solid.


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