Factories see orders for durable goods fall

Orders for U.S. durable goods unexpectedly declined in February for the first time in nearly a year, indicating a pause in the manufacturing rebound.

Bookings for durable goods — items meant to last at least three years — decreased 1.1% from the previous month, the first drop since April, after an upwardly revised 3.5% gain in January, Commerce Department figures showed Wednesday.

Core capital goods orders, a category that excludes aircraft and military hardware and is seen as a barometer of business investment, dropped 0.8% in February after solid gains of 0.6% in January and 1.5% in December.

The February figures likely represent a temporary softening in the rebound seen across the nation’s factories since the pandemic upended production and demand last year.

“In all likelihood, the February results were suppressed by unusually harsh weather that substantially disrupted economic activity in much of the South and Midwest,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., said in a note.

“There also could be an element of ‘digestion’ at play after very rapid gains in preceding months.”

Manufacturers are getting tail winds from a gradual pickup in economic activity, still-lean inventories and robust business investment among companies.

The drop in overall durables was broad, including declines in bookings for motor vehicles, machinery and fabricated metals.

Orders for commercial aircraft surged more than 103% in February from a month earlier.

Shipments of non-defense capital goods minus aircraft, a figure used to calculate investment in the government’s gross domestic product report, fell 1% in February, likely depressed by severe winter weather.

Orders for motor vehicles and parts dropped 8.7%, while shipments decreased 8.9% because of severe weather and a shortage of semiconductors.

Core capital goods orders increased an annualized 12.7% in the three months through February, while shipments rose 13.4%.