U.S. Durable Goods Orders Unexpectedly Slump As Aircraft Demand Extends Nosedive

(RTTNews) - Reflecting a continued slump in orders for transportation equipment, the Commerce Department released a report on Friday showing an unexpected decrease in new orders for U.S. manufactured durable goods in the month of February.

The Commerce Department said durable goods orders slid by 1.0 percent in February after plummeting by a revised 5.0 percent in January.

Economists had expected durable goods orders to increase by 0.6 percent compared to the 4.5 percent plunge that had been reported for the previous month.

Andrew Hunter, Deputy Chief U.S. Economist at Capital Economics, said the decline in durable goods orders indicates "business equipment investment was continuing to weaken even before the banking turmoil arose."

"With business confidence likely to have taken a hit in recent weeks and banks tightening lending standards further, we suspect business investment has further to fall," Hunter said.

The unexpected decrease in durable goods orders came as orders for transportation equipment slumped by 2.8 percent in February after tumbling by 14.0 percent in January.

Orders for non-defense aircraft and parts helped lead the lower once again, plummeting by 6.6 percent in February following a 56.3 percent nosedive in January.

Excluding the steep drop in orders for transportation equipment, durable goods orders were unchanged in February after rising by 0.4 percent in January. Ex-transportation orders were expected to inch up by 0.2 percent.

A jump in orders for electrical equipment, appliances and components helped offset decreases in orders for machinery and computers and electronic products.

The report also showed orders for non-defense capital goods excluding aircraft, a key indicator of business spending, crept up by 0.2 percent in February after rising by 0.3 percent in January.

Shipments in the same category, which is the source data for equipment investment in GDP, were unchanged in February after climbing by 0.9 percent in the previous month.