Orders for big-ticket items posted the biggest drop in March since last summer, mainly because of fewer jetliner bookings, but the generally soft report added to mounting evidence that the U.S. economy has slowed again.
Orders for durable goods fell a seasonally adjusted 5.7 percent last month, to mark the biggest drop since last August, the Commerce Department said Wednesday.
Economists surveyed by MarketWatch had expected a 3.2 percent decline.
Durable goods are products designed to last at least three years. These orders are a critical component of U.S. growth since rising sales of autos, computers, furniture and so forth signal an improving economy.
The decline in orders is the latest in a string of reports that suggest the manufacturing sector cooled off a bit toward the end of the first quarter – along with the broader economy.
“There’s clearly rising near-term caution in capital spending plans by businesses as fiscal tightening hits and global growth slows,” economist Ted Wieseman of Morgan Stanley wrote in a research note.
In recent trading, U.S. stocks advanced, but gains were harnessed by the disappointing durable-goods report.
As is often the case, a large swing in monthly orders for large and expensive commercial aircraft exaggerated the headline number on durable goods.
The commercial airline industry, which revolves around Boeing, recorded a 48 percent decline in new bookings. Industry giant Boeing accepted 39 orders for new aircraft in March, down from an unusually high 179 in February.
Orders for new autos and parts, a strong segment in the past few years, edged up 0.2 percent, but that was the smallest increase so far this year.
Excluding the volatile transportation sector, orders fell a smaller 1.4 percent, but the softness was widespread. Demand fell for primary metals, heavy machinery, electrical equipment and appliances.
Only computers and communications equipment saw an increase in bookings, but those categories had slumped in the first two months of the first quarter.
Orders for core capital goods, a key barometer of private-sector business investment, edged up 0.2 percent. Yet that followed a sharp 4.8 percent decline in February, reflecting the up-and-down nature of business investment over the past few years.
Shipments of core capital goods, a category used to calculate quarterly economic growth, rose 0.3 percent in March. The increase means economists are likely to stick to existing forecasts calling for a 3.2 percent increase in first-quarter gross domestic product. The report will be released on Friday.
Growth in the second quarter, however, is projected to taper off to 1.8 percent, according to the MarketWatch survey. A softer manufacturing sector, lower government outlays and slower consumer spending are seen as the main culprits.
Durable orders for February, meanwhile, were revised down to show a 4.3 percent gain from a prior reading of a 5.6 percent increase. That further added to the negative tone of the report.
In the first three months of 2013, orders for durable goods are down 0.1 percent compared to the same three months of 2012. Core orders are off 0.5 percent.