But at least earnings were good this morning.
WASHINGTON (MarketWatch) — Orders for U.S. durable goods in February posted the biggest drop in four months, largely because of lower sales of heavy machinery and defense-related products, government data showed Thursday.
The Commerce Department said new orders for U.S.-made products designed to last three years or more fell 0.9%. Monthly orders minus the volatile transportation sector dropped 0.6%.
Economists surveyed by MarketWatch had expected orders to rise by 1.5% overall and by an even stronger 2.5% minus transportation.
Orders have now declined in four of the past five months, suggesting some hesitancy on the part of businesses to continue to expand until they see further strengthening of the U.S. economy.
“February’s U.S. durable goods orders report is unequivocally bad,” said Paul Ashworth, chief U.S. economist of Capital Economics.
The biggest decline for February occurred in orders for machinery, which fell 4.2% to $26.6 billion. Also, orders for major defense items sank 24.8% to $8.3 billion.
Another category of orders closely watched by economists, known as core capital goods, dropped 1.3% on the heels of a 6.0% decline in January. That category excludes defense and transportation and gives a better indication of longer-term trends in the private sector.
After the report was issued, Morgan Stanley and Bank of America Merrill Lynch were among several firms that cut their economic forecasts for first-quarter U.S. growth. They now expect the economy will grow between 2.2% and 2.5%, below the current MarketWatch consensus of 3.1%.
The disappointing data will focus even more attention on next month’s durables report. What’s been a prolonged surge in the manufacturing sector would seem to indicate that the recent decline in orders is a temporary lull — but another poor report could renew worries over whether the fragile U.S. recovery is weakening.
“For now, we will put a heavy discount factor on the durables data, but we will be watching the March report with keen interest,” economist John Ryding of Conrad DeQuadros wrote in a report.
The durable-good reports also appeared to be discounted by investors. U.S. stock markets opened higher in Thursday trading, with the Dow Jones Industrial Average (DOW:DJIA) extending Wednesday’s gains.
More durables data
The biggest bright spot in February: orders minus defense rose 0.4%, marking the second increase in a row after three straight declines. Government purchases of defense products are uneven and can sometimes distort the data.Shipments of durable goods, meanwhile, rose 0.3% last month, following a 0.2% increase in January.
Shipments of core capital equipment goods, which the government uses to help calculate gross domestic product, rose 0.8% in February.
Inventories of durable goods climbed 0.9% last month, the 14th consecutive increase.
Orders for January, meanwhile, were revised up to a 3.6% increase. The government originally reported that total orders rose 3.2% on the month.
