WASHINGTON - Orders for U.S. durable goods fell in March by the most in seven months as demand slumped for commercial aircraft and business investment cooled.
Bookings for goods meant to last at least three years decreased 5.7 percent after a revised 4.3 percent gain the month before that was smaller than previously estimated, the Commerce Department reported Wednesday. The median forecast of 78 economists surveyed by Bloomberg called for a 3 percent decline. Orders excluding transportation equipment, which is volatile month to month, unexpectedly fell for a second month.
Weakness in overseas markets and lower commodities prices have restrained demand at some companies such as Caterpillar Inc., showing that manufacturing slowed as the first quarter drew to a close. At the same time, sustained motor-vehicle sales and a pickup in the housing market may help keep production from faltering, economists said.
“Manufacturing ended the quarter on a very weak note,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a 6 percent decrease in March orders.
Orders declined in March for metals, machinery and electrical equipment, Wednesday’s figures showed.
While the figures indicated business investment cooled in the first quarter after climbing at an 11.8 percent annual rate in the final three months of 2012, it is “still in a rising trend from a rare summer swoon last year,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said in a note to clients.
Wednesday’s figures showed bookings for commercial aircraft declined 48.2 percent. Boeing Co., the Chicago-based aerospace company, said it received orders for 39 aircraft in March, down from 179 placed in February.
Orders for automobiles increased 0.2 percent after a 4.7 percent jump in February. Cars and light trucks sold at a 15.2 million annual rate in March after 15.3 million the previous month, according to Ward’s Automotive Group data.
Orders for nondefense capital goods excluding aircraft, a proxy for future business investment in equipment such as computers and communications gear, rose 0.2 percent, failing to make up for a 4.8 percent slump in February.
Shipments of those products, a measure that’s used in calculating gross domestic product, climbed 0.3 percent after advancing 1.2 percent in February.
Increases last month in orders and in shipments of core capital goods suggest businesses spent more on equipment and software in the January-March quarter. That likely contributed to economic growth in the first quarter.
NOT ‘DOWNWARD SPIRAL’
“This doesn’t look like we’re entering some kind of downward spiral,” said Jonathan Basile, an economist at Credit Suisse. “This seems like a downshift from stronger growth.”
Texas Instruments Inc., the largest maker of analog chips, on Tuesday forecast second-quarter sales and profit that may top some analysts’ estimates, helped by increased orders from makers of automotive and industrial-machine parts.
“We saw strength in the industrial and automotive sectors,” said Texas Instruments’ Chief Financial Officer Kevin March.
“Customers continue to operate with very lean levels of inventory. We built order backlog in the first quarter for the first time in a couple of quarters.”
The company’s customer list includes companies from aerospace-equipment builders to car-parts suppliers, making its results a harbinger of demand across the chip business.
OVERSEAS EFFECT
At the same time, weaker overseas markets and a decrease in commodities prices have taken a toll on some companies.
Caterpillar, the largest maker of mining equipment, cut its 2013 forecast and lowered “significantly” its outlook for demand from commodities producers. Sales in 2013 will be $57 billion to $61 billion, compared with an earlier forecast of $60 billion to $68 billion.
Caterpillar equipment dealers whittled down inventories, and orders for mining equipment including trucks and bulldozers fell in the first quarter.
Capital expenditures by business remain weak, said Michael DeWalt, director of investor relations at the company, which is based in Peoria, Ill.
“Dealer inventory changes are impacting this year’s sales,” he said. “So the real end-user demand level is not quite as bad as is our production and sales level, and once you kind of get through that, it stops being a drag,” DeWalt said during a Tuesday earnings call.
Information for this article was contributed by Lorraine Woellert and Ainhoa Goyeneche of Bloomberg News and by Christopher S. Rugaber of The Associated Press.
Front Section, Pages 1 on 04/25/2013