US durable goods orders rise on resilient business spending

ORDERS placed with US factories for durable goods rose in March, pointing to sustained investment in business equipment.

Bookings for durable goods - items meant to last at least three years - increased 0.8 per cent in March after a revised 1.7 per cent decline a month earlier, Commerce Department figures showed Tuesday. The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, rose by a larger-than-forecast 1 per cent.

The median estimates in a Bloomberg survey of economists called for a 1 per cent increase in all durable goods and a 0.5 per cent gain in the core figure. 

The figures suggest sustained momentum in capital expenditures as the first quarter drew to a close. Companies are striving to enhance productivity against a backdrop of higher energy costs, shifts in supply chains and difficulty attracting skilled labour.

At the same time, Russia’s war in Ukraine, rising borrowing costs as the Federal Reserve tightens monetary policy, and concerns about a slowdown in demand are introducing more economic uncertainty.

Core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product report, rose 0.2 per cent in March for a second month.

First-quarter GDP figures will be released Thursday. Prior to the durables report, the Atlanta Fed’s GDPNow estimate shows business investment probably increased at a solid pace during the period.

The broad-based gain in durable goods included stronger bookings for communications equipment, motor vehicles, machinery and electrical equipment.

Bookings for motor vehicles increased 5 per cent after a 0.3 per cent in the prior month. Durable goods orders excluding transportation equipment increased 1.1 per cent.

Meantime, bookings for commercial aircraft declined 0.9 per cent, the government’s data showed. Boeing reported 53 orders in March, up from 37 a month earlier. Still, aircraft orders are volatile and the government data don’t always correlate with the company’s figures.

The report also showed unfilled orders for all durable goods rose 0.4 per cent, led by transportation equipment. Inventories climbed 0.7 per cent. BLOOMBERG