New orders for durable goods plunged 14.4% in March after rising 1.1% in February (previously up 1.2%). As expected, the decline was concentrated in transportation which fell 41.0% month-over-month due to sharp declines in motor vehicles of 18.4% and nondefense aircraft of 295.7%. Defense aircraft were up 63.7%, but this was an increase from a very low level. Excluding transportation, orders were off 0.2%. However, what strength there was in the report was in defense orders. Defense capital goods were up 4.3%. Overall orders excluding defense were down 15.8%.
I have two footnotes to the orders data:
First, the surge in cancellations at Boeing resulted in new orders for nondefense aircraft to be an outright negative of -$16,345 million. This hasn’t been seen since the -$4,500 million in December 2009 as the aircraft industry struggled to regain its footing after the recession.
Second, orders for communications equipment were up 3.7% and electrical equipment, appliances, and components were up 1.5%. I would speculate that orders here reflected the exodus of workers from the office to home and the need to amp up communications infrastructure — both personal and business.
So-called “core” new orders — orders excluding civilian aircraft capital goods and defense capital goods — fell 5.3% in March, reflecting the widespread weakness in the need/demand for hard goods. It like presages a lower trend for orders for the coming months.
Unfilled orders were down 2.0% in March, mainly due to the contraction in aircraft orders, but also because of order backlogs more generally declining. Shipments were off 4.5% as there were fewer orders to complete and less movement of goods generally. Inventories were up 0.6% as some stocks accumulated although caution in prior months and caution in the present will keep this to a minimum in coming months.
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