Orders for U.S. durable goods decline by most since August

Business Investment

Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in equipment such as computers and communications gear, rose 0.2%, failing to make up for a 4.8% slump in February.

Shipments of those products, a measure that’s used in calculating gross domestic product, climbed 0.3% after advancing 1.2% in February.

Texas Instruments Inc., the largest maker of analog chips, on April 23 forecast second-quarter sales and profit that may top some analysts’ estimates, helped by increased orders from makers of automotive and industrial-machine parts.

“We saw strength in the industrial and automotive sectors,” Chief Executive Officer Kevin March said in an interview. “Customers continue to operate with very lean levels of inventory. We built order backlog in the first quarter for the first time in a couple of quarters.”

The company’s customer list includes companies from aerospace-equipment builders to car-parts suppliers, making its results a harbinger of demand across the chip business.

Global Economy

At the same time, weaker overseas markets and a decrease in commodities prices have taken on toll on some companies.

Caterpillar, the largest maker of mining equipment, cut its 2013 forecast and lowered “significantly” its outlook for demand from commodities producers. Sales in 2013 will be $57 billion to $61 billion, compared with an earlier forecast of $60 billion to $68 billion.

Caterpillar equipment dealers whittled down inventories and orders for mining equipment including trucks and bulldozers fell in the first quarter. Capital expenditures by business remain weak, said Michael DeWalt, director of investor relations at the company, which is based in Peoria, Illinois.

“Dealer inventory changes are impacting this year’s sales,” he said. “So the real end-user demand level is not quite as bad as is our production and sales level, and once you kind of get through that, it stops being a drag,” DeWalt said on an April 22 earnings call.

Bloomberg News

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