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Economy in Brief

U.S. Durable Goods Orders Decline Unexpectedly in February
by Tom Moeller  March 24, 2021

• Fall in orders is broad-based and likely reflects severe winter weather.

• Orders of core capital goods reverse January gain.

• Shipments weaken but order backlogs & inventories rise.

Manufacturers' orders for durable goods declined 1.1% (+3.2% y/y) during February following a 3.5% January gain, revised from 3.4%. A 0.6% Improvement had been expected in the Action Economics Forecast Survey. The latest decline followed nine consecutive monthly increases.

Orders for nondefense capital goods excluding aircraft fell 0.8% (+9.1% y/y) following a 0.6% January rise, initially reported as 0.5%. The decline also followed increases in each of the nine prior months.

In the major categories of the report, primary metals and fabricated metals orders weakened, posting 0.5% (+6.4% y/y) and 0.9% (+6.5% y/y) declines, respectively. Machinery orders eased 0.6% (+5.9% y/y) while computer & electronic product orders weakened 0.5% (+8.9% y/y) for a second consecutive month. Orders for electrical equipment rose 0.2% (7.3% y/y) but transportation equipment bookings declined 1.6% (-5.8% y/y), reflecting an 8.7% drop (-3.0% y/y) in motor vehicle & parts orders.

Shipments of durable goods fell 3.5% (+1.5% y/y) following sharp increases in the prior two months. Shipments of core capital goods fell 1.0% (+7.7% y/y) in February, also after two months of strong gains. Shipments of transportation products declined 8.2% (-7.3% y/y) as auto and aircraft shipments fell sharply. Shipments excluding transportation weakened 1.2% (+6.1% y/y) after increasing in each month since May.

Unfilled orders for durable goods surged 0.8% (-5.8% y/y) in February after a 0.2% January increase. Order backlogs, excluding transportation, rose 0.9% (5.7% y/y), following nine consecutive months of gains.

Inventories of durable goods rose 0.7% (1.1% y/y) in February, after two consecutive monthly declines. Excluding transportation, inventories increased 0.7% (-0.0% y/y) and have been rising for six consecutive months.

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

Durable Goods NAICS Classification Feb Jan Dec Feb Y/Y % 2020 2019 2018
New Orders (SA, % chg) -1.1 3.5 1.2 3.2 -7.1 -1.5 7.1
    Transportation -1.6 7.5 0.1 -5.8 -20.0 -4.8 9.2
  Total Excluding Transportation -0.9 1.6 1.8 8.2 -0.3 0.4 5.9
    Nondefense Capital Goods Excl. Aircraft -0.8 0.6 1.5 9.1 1.6 1.7 4.6
Shipments -3.5 1.7 2.1 1.5 -5.2 0.8 6.6
    Nondefense Capital Goods Excl. Aircraft -1.0 1.9 1.1 7.7 0.2 2.4 5.7
Unfilled Orders 0.8 0.2 -0.2 -5.8 -6.4 -1.8 3.9
Inventories 0.7 -0.3 -0.2 1.1 0.6 4.1 5.2
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