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First Cut: New orders for all factory goods flat in February

New orders for all factory goods were flat in February from January, while the dollar value of orders was revised lower for January to down 0.5% (previously down 0.3%). New orders for nondurables were down 1.2% on widespread softness that included a 6.1% drop for petroleum refineries with lower prices for crude oil. Durables orders were up 1.2%, mainly on the transportation component which rose 4.6%. However, that rise was concentrated in ships and boats which gained 124.7%, probably related to defense orders. Orders for motor vehicles were down 0.1%, nondefense aircraft was off 13.3% and defense aircraft fell 13.3%.

“Core” durable orders — orders excluding civilian aircraft and defense capital goods — were down 0.5% in February and 0.3% in January. The underlying trend for orders for hard goods is weak and not likely to improve any time soon. The COVID-19 pandemic is playing havoc with orders and supply chains as consumers and businesses are mired in uncertainty.

Unfilled orders were restrained by weakness in aircraft and were up a bare 0.1%. The value of shipments fell 0.2% in part on the softness in nondurables prices, although durables orders were moved out quickly. Inventories were down 0.4% as businesses were both unable to restock and unwilling to do so in the face of rising questions about the outlook.

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