U.S. Durable Goods Orders Surge Pre-Coronavirus Outbreak; Orders Excluding Aircraft Ease

Manufacturers' orders for durable goods strengthened 1.2% during February before business ground to a halt in March. Despite the m/m improvement, orders remained down 0.1% y/y. A 1.0% decline had been expected in the Action Economics Forecast Survey. The y/y orders decline closely matched the 0.5% shortfall in industrial production of durable goods.

Last month's orders decline was led by a 0.8% drop (-0.6% y/y) in nondefense capital goods orders which reversed a 1.0% January increase. 

Stronger transportation sector orders led the overall orders increase in February with a 4.6% gain. Orders excluding transportation eased 0.6% (-0.9% y/y) and reversed January's rise. The transportation increase was led by a 1.8% surge (-2.6% y/y) in motor vehicle & parts. Aircraft & parts orders eased m/m.

Orders for electrical equipment & parts rose 1.3% (3.2% y/y). Offsetting this rise was a 0.8% decline (-0.3% y/y) in bookings for computers & electronic products. Also weakening were machinery orders which fell 0.5% (-2.5% y/y). Primary & fabricated metals orders also eased both m/m and y/y.

Shipments of durable goods rose 0.8% (-2.4% y/y) as transportation shipments rose 2.9% (-5.1% y/y). Shipments less transportation eased 0.2% (-1.0% y/y) helped by a 0.7% decline (-1.3% y/y) in nondefense capital goods shipments excluding aircraft.

Unfilled orders for durable products improved 0.1% (-1.7% y/y) following two months of stability.

Durable goods inventories were unchanged (3.7% y/y) last month, although they had been rising steadily through December. These gains were powered by strength in the transportation sector. Inventories less transportation fell 0.2% for a second consecutive month and were down 0.7% y/y.

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.

The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 29.4% (+78.6% y/y) during the week ending March 20 after an 8.4% decline in the prior week. The decline occurred as refinancings fell by roughly one-third (+195.4% y/y) after a 10.4% drop, and purchase applications weakened 14.6% (-11.3% y/y) following the prior week's 0.9% slip.

The effective interest rate on a 15-year fixed-rate mortgage rose sharply to 3.38% from 3.20% in the week ended March 13. It was the highest rate since early-January but remained well below the peak of 4.71% early in November 2018. The effective interest rate on the 30-year fixed-rate mortgage also rose to 3.93%, the highest rate since mid-January. The effective rate on a 30-year Jumbo mortgage increased to 3.95%, and the rate on the 5-year adjustable rate mortgage rose to 3.48%.

The average mortgage loan size fell to $337,000 last week (-2.8% y/y). The average loan size of refinancings declined to $337,500 (-6.9% y/y). The average loan size for purchases fell to $336,000 and was unchanged y/y.

Applications for fixed-rate loans were up a lessened 81.9% y/y, while applications for adjustable rate loans moved up 39.8% y/y.

The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for each index is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.