US durable goods orders dip in March

US durable goods orders dip in March
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: April 23 2010 14:20 | Last updated: April 23 2010 14:20
http://www.ft.com/cms/s/0/b568c64a-4ed3-11df-abb5-00144feab49a.html?nclick_check=1


New orders for durable goods in the US unexpectedly fell in March thanks to plummeting demand for aircraft, official figures showed on Friday, but the details of the data showed continuing strength in the manufacturing sector.

Durable goods orders fell by 1.3 per cent, marking their first fall in the last four months, according to the commerce department. This missed economists’ expectations that they would continue to rise and was a turnaround from February, when orders were up by a revised 1.7 per cent.

Compared with a year ago, new orders have climbed by a healthy 11.6 per cent.

The monthly decline was due to a 67 per cent decline in orders for non-defence aircraft and parts. Excluding orders for transportation equipment, which tend to be volatile, new orders were up by 2.8 per cent last month.

“The durables goods orders headline was soft, but the key underlying components were strong,” said Alan Ruskin, strategist at RBS Securities.

Mr Ruskin noted that non-defence capital spending, excluding aircraft, rose by 4 per cent in March and has rebounded since the beginning of the year. Analysts keep a close watch on this figure, as it tends to foreshadow hiring.

Orders for machinery, computers and electrical equipment all recorded solid increases during the month.

Inventories were also up in March, rising by 0.2 per cent. That was the third consecutive monthly rise and is expected to provide a boost to economic output, as companies look to replenish their stocks.

“On an overall basis, inventories will remain a net positive for real GDP growth in the quarters ahead,” said Joshua Shapiro, chief US economist at MFR.