WASHINGTON – Demand for long-lasting factory goods rose more slowly in March, reflecting a decline in orders of cars and machinery.
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Orders for durable goods--products designed to last at least three years, such as trucks and computers--increased 0.7% from the prior month to a seasonally adjusted $238.71 billion in March, the U.S. Commerce Department said Thursday.
Economists surveyed by The Wall Street Journal had expected a 1.3% gain for orders last month. In February, orders rose 2.3%, revised up from an earlier estimate of a 1.8% gain. Orders rose 2.4% in January.
Overall demand grew more slowly in March in part because orders for motor vehicles and parts declined for the second straight month, falling 0.8% from February.
Automotive production had been a driver of growth for much of the economic recovery, but demand in the sector appears to be easing in recent months after hitting record levels in 2015 and 2016.
Meanwhile, orders for civilian aircraft and parts, a volatile category, rose 7% from the prior month. In February, civilian-aircraft orders rose to an upwardly revised 52.7%, a major revision from the prior estimate of up 47.6%.
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Excluding transportation, orders fell 0.2% in March, the first decline in six months.
A closely watched proxy for business spending on new equipment, orders for nondefense capital goods excluding aircraft, rose 0.2% in March.
Data can be volatile from month to month, but the broader trend shows gradual improvement. Total durable-goods orders were up 3.4% in the first three months of 2017 compared with the same period a year earlier. Orders for nondefense capital goods excluding aircraft rose 2.1% over the past three months compared with the first quarter of 2016.
An improving global economy, a stabilized energy sector and a strong housing market generally supports demand for U.S. manufactured goods.
But challenges persist. A stronger U.S. dollar makes American-made goods relatively more expensive for overseas buyers. And U.S. consumer demand showed signs of easing this year. Slower growth in household spending is a primary reason forecasters project the economy to have advanced at just a 1% annual pace in the first quarter, about half as strong as the average annual growth rate for the nearly eight-year long expansion.
The Commerce Department will release its initial report on first-quarter gross domestic product on Friday.
Other manufacturing gauges have been uneven recently.
Manufacturing output, a measure of production rather than orders, fell in March for the first time in seven months, according to the Federal Reserve. The Institute for Supply Management said its index of factory activity showed a slightly slower expansion in March. February's ISM reading with the best since August 2014.
Thursday's report showed orders for machinery declined 0.2%, reversing a recent growth trend. Orders for primary metals and electronic equipment and appliances increased last month.
Defense capital goods orders rose 12.2% during March. Excluding defense, overall orders rose 0.1%.
The Commerce Department's durable-goods report can be accessed at: https://www.census.gov/manufacturing/m3
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Corrections & Amplifications
This item was corrected at 11:04 a.m. ET to show that orders for civilian aircraft and parts rose 7% in March from the prior month and an upwardly revised 57.2% in February, not a rise of 26.1% and a drop of 11.7% respectively.
Orders for civilian aircraft and parts rose 7% in March from the prior month and an upwardly revised 57.2% in February. "U.S. Durable Orders Edge Up In March," at 8:45 a.m. EDT, incorrectly stated the change in orders for both months in the sixth paragraph. (April 27, 2017)
(END) Dow Jones Newswires
April 27, 2017 11:17 ET (15:17 GMT)