April 27, 2017 – Durable goods orders, which are orders to buy products that are expected to last at least 3 years, indicates how busy factories will be in the near future. As the name suggests, durable orders provide a look into demand for equipment along with other big-ticket purchases, such as vehicles and appliances. An increase in capital spending and consumer purchases indicates an increase in business investment and personal consumption in GDP.
New orders for durable goods rose 0.7% in March, below expectations of a 1.1% increase and February’s upwardly revised increase of 2.3%. New orders are now up 5.8% year-over-year. Civilian aircraft led the gains, increasing 8.7%. Orders excluding transportation showed weakness, falling 0.2% for the month while core capital goods, increased 0.2%. Core capital goods orders are up 3.0% year-over-year. Shipments for core capital goods rose 0.4%.
Volatile aircraft orders led the gains for the month of March. When we strip out the transportation figures, we see a decline for the month. Orders for motor vehicles and parts decreased for the month, marking the second straight month of decline. On the plus side, shipments of core capital goods increased in the month, which will be reflected in the first quarter’s GDP figures for nonresidential business investment.