WASHINGTON -- Led by a surge in demand for commercial aircraft, U.S. orders for long-lasting manufactured goods rebounded in February, reversing a drop in January, to rise at the fastest pace since June.
The Commerce Department said Friday that orders for durable goods, items meant to last at least three years, rose 3.1 percent last month, beating economists' expectations handily. They had fallen 3.5 percent in January.
Orders have risen three of the past four months, sign that American industry is humming thanks to a pickup in global economic growth.
February orders were lifted by a 25.5 percent jump in orders for aircraft and aviation parts, a category that swings wildly from month to month. Excluding the volatile transportation sector, orders rose 1.2 percent -- the seventh gain in the past eight months.
A category that tracks business investment -- orders for nondefense capital goods excluding aircraft -- rose 1.8 percent after dipping in January.
American industry has benefited from stronger global growth and a drop in the dollar that makes U.S. products less expensive overseas. Manufacturers have added 224,000 jobs over the past year, the best 12-month gain since May 1998.
The bigger-than-expected rebound in the data suggests corporate outlays for equipment are expected to remain strong in the first three months of the year after accelerating for five straight quarters, and some analysts may upgrade tracking estimates for first-quarter figures. While there still may be a tempering in the pace of investment, spending continues to be supported by firmer global economic growth and lower tax rates.
That was also the message from Federal Reserve policymakers this week. In their statement accompanying a quarter-point increase in interest rates, officials said "recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings." Still, they said the "economic outlook has strengthened in recent months."
The sizable jump in February's figures reflected increases in categories including primary metals, fabricated metal products, machinery and electrical equipment, and appliances. That could also reflect possible efforts by businesses to place orders before tariffs by President Donald Trump's administration on imported steel and aluminum took effect. Investors and economists will watch data including durable goods and trade closely in coming months for any indications of an impact from the tariffs and other trade and retaliatory measures.
"A strong pickup in February durable goods orders and a broader acceleration in durable goods shipments signals that business investment is on an improving trajectory," said Carl Riccadonna and Yelena Shulyatyeva of Bloomberg Economics. "This is due to a combination of rising 'animal spirits' in the corporate sector, which are party attributable to the Administration's policies, incentivized capital spending in the tax reforms enacted at the end of last year and more broadly due to the effective middle-stage of the economic cycle commencing -- one in which capacity constraints necessitate business investment in equipment, technology and facilities."
Information for this article was contributed by Paul Wiseman of The Associated Press and by Vince Golle of Bloomberg News.
Business on 03/24/2018