Aircraft drive 5.7% jump in big-ticket orders: Yet bookings for durable goods fall 0.5% outside of transportation

WASHINGTON (MarketWatch) — Orders for long-lasting U.S. goods surged in February largely because of gains in the volatile aircraft and defense segments, but demand was mixed for other manufacturers.

The split verdict on durable goods suggests U.S. manufacturers continue to expand modestly but at an uneven pace. Still, orders have accelerated sharply over the past few months and businesses appear to have boosted investment, a positive sign for the economy.

In recent trades Tuesday, U.S. stocks moved higher, as the reports on durables and home prices outweighed a decline in consumer confidence.

Durable-goods orders climbed 5.7% last month to a seasonally adjusted $232.1 billion after a revised 3.8% drop in January, the U.S. Commerce Department said Tuesday. Economists polled by MarketWatch forecast a 4.6% gain, largely because of a snapback in bookings for Boeing jets.

Yet orders outside of transportation fell 0.5% to mark the first decline in six months. Most of the decrease was concentrated in fabricated metals (-4.4%), heavy machinery (-2.2%) and network-communications equipment (-7.6%).

Orders for primary metals and computers, however, both turned positive after retreating in January.

Computer bookings, a major category of business investment, rose 4.9%. Orders for primary metals, another leading indicator of demand for manufactured goods, edged up 1.7%.

The biggest increase in orders took place in commercial aircraft, a typically see-sawing category. Orders soared 95.3% in February after a 24% plunge in the prior month. Auto orders also rose 3.8%, reflecting strong demand for new cars and trucks.

Orders for core capital goods, a key barometer of private-sector business investment, dropped 2.7% after a 6.7% increase in January. It was the largest decrease since July.

Shipments of core capital goods, a category used to calculate quarterly economic growth, rose 1.9% in February. The bigger-than-expected increase indicates that growth in the nation’s economy in the first three months of 2013 could turn out somewhat higher than the current MarketWatch forecast of 2.5%.

Orders for January, meanwhile, were revised to a 3.8% decline from a prior reading of a 4.9% drop.

The durables report can be herky-jerky from one month to the next and subject to large revisions, so economists look at longer trends. In the past three months, orders are running at a double-digit annual pace compared to the three months before that.

The “monthly numbers are very volatile,” said chief economist Ian Shepherdson of Pantheon Macroeconomic Advisors. “What matters is the trend, which is strong.”

In separate reports Tuesday, new home sales slowed in February and consumer confidence posted a surprisingly large drop.

Source:  http://articles.marketwatch.com