GO
Loading...

Durable Goods Orders Fell A Steep 1.7% in February

New orders for long-lasting US-made manufactured goods unexpectedly fell 1.7 percent during February and a key gauge of companies' appetite for investment also shrank, according to data on Wednesday that will reinforce concern the economy has chilled.

CNBC.com

Stock futures fell, government Treasury prices rose and the dollar weakened on the Commerce Department data, which compounds a rash of bad economic news that investors think will force the Federal Reserve to slash interest rates again.

"This report further corroborates the notion that, in addition to the financial crisis, the US faces a real economic downturn," said T.J. Marta, a fixed income strategist at RBC Capital Markets in New York.

Analysts surveyed by Reuters predicted the report would show overall durable goods orders rose 0.8 percent in February, rebounding from January's revised fall of 4.7 percent. This was previously reported as a 5.1 percent drop.

A global credit crisis sparked by the collapse of the subprime mortgage market has spilled into the wider economy.

This has forced the Fed to cut its benchmark interest rate 3 percentage points since mid-September, and inject billions of dollars into the financial system to stop it seizing up.

"Very weak numbers on the headline, so highlighting the domestic demand is really weighing on capital spending overall," said Camilla Sutton, a currency strategist at Scotia Capital in Toronto.

Nondefense capital goods orders excluding aircraft, a closely watched proxy for business spending, declined 2.6 percent after falling a downwardly revised 1.8 percent in January, the Commerce Department said. It was the biggest decline since a 3 percent fall in October 2007 and was far larger than the 0.1 percent slip forecast by economists.

Machinery orders slumped 13.3 percent, the steepest decline since records began in 1992, although the Commerce Department noted that the previous two months had both showed gains.

The Institute for Supply Management already reported the manufacturing sector contracted in February, so economists' optimism had been limited to a monthly boost on the back of the aircraft sector.

The headline durable goods report can be buffeted sharply from month to month by aircraft orders from aerospace giant Boeing.

The Commerce Department said civilian aircraft orders rose 5.4 percent in February, while orders ex-transportation declined 2.6 percent in the largest fall in over a year, compared with a forecast for a 0.3 percent drop.

Non-defense orders were 1.6 percent lower, versus an estimate for a 0.8 percent retreat.

Featured

Contact Economy

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More