Orders for U.S. durable goods fell in March by the most in seven months as demand slumped for commercial aircraft and business investment cooled.
Bookings for goods meant to last at least three years decreased 5.7% after a revised 4.3% gain the prior month that was smaller than previously estimated, the Commerce Department reported today in Washington. The median forecast of 78 economists surveyed by Bloomberg called for a 3% decline. Orders excluding transportation equipment, which is volatile month to month, unexpectedly fell for a second month.
Weakness in overseas markets and lower commodities prices have restrained demand at some companies such as Caterpillar Inc., showing manufacturing slowed as the first quarter drew to a close. At the same time, sustained motor vehicle sales and a pickup in the housing market may help keep production from faltering.
“Manufacturing ended the quarter on a very weak note,” said, Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a 6% decrease in March orders. “Not only was the March number weak but we lost on the prior revision.”
Orders declined in March for metals, machinery and electrical equipment, today’s figures showed. Estimates for durable goods in the Bloomberg survey ranged from a drop of 6% to a 1% gain after a previously reported February gain of 5.6%.
Stock-index futures erased gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June declining less than 0.1% to 1,573.3 at 8:45 a.m. in New York.
Today’s figures showed bookings for commercial aircraft declined 48.2%. Boeing Co., the Chicago-based aerospace company, said it received orders for 39 aircraft in March, down from 179 placed in February.
Orders for automobiles increased 0.2% after a 4.7% jump in February. Cars and light trucks sold at a 15.2 million annual rate in March after 15.3 million the prior month, according to Ward’s Automotive Group data.
Bookings excluding demand for transportation equipment decreased in March after a 1.7% decline the prior month. Those orders were projected to rise 0.5%, according to the Bloomberg survey median.
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.
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.