Durable-goods orders fall 2.8%
Commercial aircraft off 27.1%; business investment down
WASHINGTON — Orders to U.S. factories for longlasting manufactured goods fell in February with a key category that tracks business investment dropping by the largest amount since December.
Orders for durable goods fell 2.8 percent in February after a 4.2 percent increase in January, the Commerce Department said Thursday. Commercial aircraft, a volatile category, fell 27.1 percent after surging 48.6 percent in January.
Orders in a category that serves as a proxy for business-investment spending fell 1.8 percent after a 3.1 percent rise in January. It was the biggest decline in the investment category since a 3.5 percent drop in December.
Economists saw the big decline in durable-goods orders as evidence that the manufacturing sector remains under pressure.
“A lot of it is a function of businesses not being very confident about the outlook,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in New York, who correctly projected the drop in durable-goods orders. “That’s a combination of a few things — businesses who export are potentially facing weaker demand, and another important element of it is the policy landscape is very uncertain right now.”
Sal Guatieri, senior economist at BMO Capital Markets, said the drop in orders for business investment suggested that capital investment would be a drag on overall economic growth in the first quarter. He said that if next week’s consumer spending report also comes in weaker than expected, then he will have to trim his current 2.3 percent forecast for firstquarter growth.
Manufacturing had a
tough year, and prospects remain uncertain for 2016. The sector is being hurt by economic weakness in major export markets and a strong dollar.
The rising value of the dollar against other currencies makes U.S. goods less competitive in foreign markets.
The large drop in demand for commercial aircraft reflected weakness in orders at airplane giant Boeing. Demand for military aircraft and parts fell 29.2 percent in February after a 97 percent surge in January.
The weakness in demand for nondefense capital goods excluding aircraft, the category used as a proxy for business investment, reflects in part trouble in the energy industry, which has suffered cutbacks and layoffs because of the big plunge in oil prices over the past year.
For February, orders for machinery fell 2.6 percent while demand for appliances and other electrical equipment dropped 2.8 percent. Demand for computers rose 1.3 percent while orders for communication equipment fell 2.3 percent.
In another economic report Thursday, more people sought U.S. unemployment aid last week, but applications are still at a low level consistent with steady job growth.
The Labor Department said weekly applications for unemployment benefits rose 6,000 to a seasonally adjusted 265,000. The four-week average, a less volatile figure, increased just 250 to 259,750. The number of people receiving benefits fell to 2.18 million from 2.22 million the previous week. That is 8.3 percent lower than a year earlier.
Applications are a proxy for layoffs, so the data indicate that businesses are holding tightly onto their staffs, despite overseas economic turmoil and modest growth in the U.S.
Applications have been below 300,000, a historically low level, for 55 straight weeks, the longest stretch since 1973. Many businesses say they are having trouble finding new employees with the skills and experiences they need, so that may contribute to their reluctance to lay off any of their current staff.