New orders for durable goods rose 1.2% in February after eking out a small 0.1% rise in January (previously down 0.2%). The increase was largely due to a 4.6% increase in the transportation component. Excluding transportation, orders were down 0.6%. The headline was an upside surprise that will be read in the context of old numbers overtaken by events.
In transportation, the gain was mainly due to 1.8% increase for motor vehicles and parts. Orders for nondefense aircraft and parts were down 0.3% and defense aircraft and parts were down 14.9%. Outside of transporation, most compents were lower except for electrical equipment, appliances, and components which rose 1.3%.
“Core” new orders — orders less civilian aircraft capital goods and defense capital goods — were down 0.5% in February. The underlying trend for orders has been lackluster at best.
Unfilled orders nudged 0.1% higher in February and was also the product of an increase for motor vehicles of up 0.6%. In most other categories, unfilled orders declined. Unfilled orders for nondefense aircraft were down 0.1% and were 0.6% lower for defense aircraft. The cascade of cancellations in 737 MAX aircraft means that backlogs are diminishing in conjunction with the completion of other models of aircraft.
Inventories were flat in February with a small increase of 0.4% in transportation equipment offset by widespread declines.
Shipments were up 0.8% in February as getting product out the door kept up with orders coming in.
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