Fleet Management

Economic Watch: Durable Good Shipments and Orders Leap

April 24, 2014

By Evan Lockridge

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Shipments and new orders for manufactured durable goods in the U.S. both posted solid gains in March, according to a new U.S. Commerce Department report.

Shipments increased 1.1% from February, the second consecutive monthly increase, following a 1% gain the month before. Transportation equipment, also up two consecutive months, led the increase, adding 1.5%.

Durable goods are manuctured items designed to last three years or more.

New orders for manufactured durable goods in March increased 2.6% The hike, up two consecutive months, followed a 2.1% February gain. Transportation equipment, also up two consecutive months, led the increase, adding 4%. Excluding transportation, new orders increased 2%.

Compared to a year ago, shipments are up 3.4% with new orders 3.6% higher.

Capital goods orders surged 8.5% in March after three consecutive months of declines due to a 21.6% increase in defense orders. Capital goods orders are up 12.4% over the last 12 months with defense orders up 32.7% over the same period.

Non-defense orders were also up, jumping 7.1% in March after a 2.8% drop in February. Also capital goods orders, minus those for defense and aircraft, rebounded in March, although to a lesser extent, up 2.2%, a four-month high.

The overall gains in both March and February, followed significant declines in December and January, raising concerns about the health of the U.S. economy.

“This morning's report marks the second consecutive month of plus 2% growth in orders after outsized weakness at the end of 2013 and the start of 2014, suggesting a return of at least some momentum in capital spending,” said Lindsey Piegza, chief economist with the investment firm Sterne Agee. “Although, looking at a longer-term trend it is clear business investment remains tepid relative to 2010 and even the lesser peak levels in early 2013,”

She said while this a welcomed step in the right direction, the general activity level in business spending remains unclear and uneven. “There are still clearly barriers and hesitancy on the side of businesses to invest in equipment, structures and most importantly, employees.”

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