Orders for US-made durable goods spiked higher in February, following a dismal January in which we saw total orders revised lower to a negative 7.3%. According to the Commerce Department’s monthly M3 Report, February’s durable goods orders jumped 3.4%, mostly on increased demand for machinery and other capital goods. The gain is the biggest in more than a year and the first in 7 months, as the economy, backed by improving retail sales and positive signs in the housing market, seems to be bottoming out. Economists were expecting a decline of 2% for the month.
Excluding the 2.0% increase in transportation orders, durable goods orders rose 3.9%, the most since August 2005. Excluding defense-related items, and orders rose 1.7%.
Orders for core capital equipment, a proxy for future business investment, rose 6.6%, after falling by 11.3% in January. Core capital equipment orders, which exclude aircraft and non-defense goods, are the best monthly indicator of capital expenditures.
Orders for capital goods — the kind of equipment that businesses need to increase or modernize their productive capacity — jumped 11% in February after a 14.8% decline in January.
Machinery orders rose 13.5% in February, the biggest gain in just under five years. The sector, which includes construction equipment, turbines, industrial machinery and oil-drilling equipment, was down 26% in the past year.
Electronics orders rose 1.6%.
Shipments of durable goods fell 0.5% last month. This is the seventh straight monthly decline.
Shipments of semiconductors fell 21.2% in February.
Inventories of durable goods fell 0.9% on the month.
Orders for primary metals decreased 0.6%, while shipments fell 1.4%.
Orders for fabricated metals rose 1.5%. Shipments dropped 0.5%.
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