Durable Goods Orders Fall 2.8% In February

Date: March 28, 2016 Last Edit: March 29, 2016

Transportation Equipment Orders Decline Most; Computer And Motor Vehicle Sales Rise

According to the latest Commerce Department data, in February, US durable goods orders fell by a seasonally-adjusted 2.8%, or $6.6 billion, after they increased by 4.2% in January. Transportation equipment was the category with the largest monthly decline, falling 6.2% in February to $74.2 billion in orders. The Wall Street Journal reported the February decrease was just shy of the 3% it projected. The article said that weak global growth, financial volatility, and low oil prices have contributed to the drop in spending. Bloomberg News reported durable goods orders fell for “the third time in four months” in February, “reflecting a broad-based slowdown that underscores lingering softness in US capital investment.” Economists surveyed by Bloomberg had predicted a 3% decline. The article added that orders for “non-defense capital goods excluding aircraft, a proxy for future business investment in items such as computers, engines and communications gear,” dropped 1.8%, which “exceeded the median forecast” that placed the decline at 0.5%. According to Bloomberg, the only bookings to rise in February were for motor vehicles and computers. The AP reported that economists see the large monthly decline in durable goods orders as an indication of continued pressure in the manufacturing sector, which faces uncertain prospects as it continues to be “hurt by economic weakness in major export markets and a strong dollar.” Breaking down the data further, the AP stated that “orders for machinery fell 2.6 percent while demand for appliances and other electrical equipment dropped 2.8 percent. Demand for computers rose 1.3 percent while orders for communication equipment fell 2.3 percent.”

What This Means For Small Businesses

Small businesses in the manufacturing sector are suffering a longer period of uncertainty due to fluctuating market demand for goods. The latest Commerce Department data indicate this period of uncertainty is likely to continue for the foreseeable future.

Additional Reading

Reuters also covered the latest durable goods data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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