Orders for long lasting consumer products reversed their January decline and business purchases ended two negative months as U.S. factories regained the momentum of the last year's economic growth.
Overall orders jumped 3.1 percent in February almost replacing January's revised 3.5 percent drop and business capital goods purchases, an oft used proxy for investment spending, rose 1.8 percent, more than surpassing the total 0.9 percent decrease in the prior two months, according to the Commerce Department on Friday. Both categories more than doubled their median forecasts, 1.5 percent for the overall and 0.8 percent for capital goods.
Shipments of these business goods which are incorporated into the government's calculation of gross domestic product, (GDP) rose 1.4 percent in February, just shy of tripling the 0.5 percent estimate and January's figure was revised up to 0.1 percent from the initial -0. percent.
This larger than expected gain in business expenditures and orders may boost first quarter GDP estimates and suggest that corporate spending will remain steady in the first quarter after advancing for the previous five quarters.
The Atlanta Fed GDPNow measure is currently at 1.8 percent annualized. The next update is this Thursday, March 29th.
The durable goods designation includes business and consumer factory products from toasters to cars and military equipment designed to last more than three years.
Non-defense orders rose 2.5 percent in February after falling the same amount in January. Excluding transportation equipment, durable goods orders rose 1.2 percent after falling 0.2 percent in January. Civilian aircraft, in practice largely the order book of the Boeing Company of Chicago, and an historically volatile statistic, jumped 25.5 percent in February following the prior month's 27.9 percent drop.
Purchases rose in most industrial and consumer categories including primary metals, machinery, fashioned metals, electrical equipment and appliances. Orders for automobiles and parts increased 1.6 percent after the previous 0.1 percent gain; orders for communications equipment fell 8.4 percent.
Chief Market Strategist