New orders for long-lasting U.S. factory goods posted only a moderate increase in February, supporting the view that economic growth in the first quarter was shaping up to be lackluster.
Durable goods orders increased 2.2 per cent last month, missing economists’ forecasts and only partially reversing January’s revised 3.6 per cent decline, Commerce Department data showed on Wednesday.
A gauge of future business investment also fell short of forecasts.
“The economy is slowly improving, but it is definitely a halting recovery where we’re not accelerating to any great degree,” said Liam Dalton, president of Axiom Capital Management Inc in New York.
Manufacturing has been a key support for the U.S. recovery from the 2007-2009 recession, and a recent acceleration in job growth has boosted hopes the extra income will create a virtuous cycle that leads to more spending.
Still, many economists are skeptical hiring will accelerate in coming months and Federal Reserve Chairman Ben Bernanke said on Tuesday it was too soon to declare victory in the recovery. Regarding the possibility of further monetary stimulus to spur stronger growth, he said the bank was not taking any options off the table.
Wednesday’s data suggested the factory sector might not be growing as fast as analysts had expected, and U.S. stocks were lower. U.S. government debt prices were little changed.
Economists expected orders for durable goods, which are items from toasters to aircraft that are meant to last three years or more, to rise 3.0 per cent.
Capital Economics economist Paul Ashworth said February’s reading reinforced expectations total economic output growth would slow during the first quarter to around a 2 per cent annual rate. That pace would generally be seen as too weak to bring down the 8.3 per cent unemployment rate.
In the fourth quarter, company efforts to restock shelves helped gross domestic product expand at a 3.0 per cent annual rate. As the impetus from restocking fades, factory output will slip absent a pick-up in orders.
Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, rose 1.4 per cent in February.
Excluding transportation, orders climbed 1.6 percent. Machinery orders increased 5.7 per cent.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for future business investment, edged 1.2 per cent higher, missing analysts’ expectations of a 2.0 per cent gain. They fell 3.7 per cent in January.
A 3.9 per cent increase in bookings for transportation equipment in February - including a 6.0 per cent jump in civilian aircraft orders - helped drive overall orders higher.
Boeing received 237 orders for aircraft during the month, according to the plane maker’s website, up from 150 in January.
Orders for motor vehicles edged up 1.6 percent.
In a separate report, the Mortgage Bankers Association said its gauge of loan requests for home purchases rose 3.3 per cent in the week ended March 23, the latest sign of rekindling activity in the housing market.