In February, manufacturers' orders for durable goods rebounded 5.7% after dropping 3.8% (revised) in January. Orders rose $232.1 billion, driven by an astounding 21.7% increase in transportation orders. If transportation weren't included, then orders fell half a percent.
Similarly, shipments of previously ordered durable goods rose $2.2 billion, or 1%, to $229.3 billion. Again, transportation boosted shipments, contributing $1 billion to the increase. Durable goods orders are an indicator of future growth, while durable goods shipments indicate current growth.
The jump in transportation orders was led by nondefense aircraft and parts, which increased $9 billion. You have Boeing to thank for that. In February, Icelandair ordered 16 737 MAX airplanes, valued at $1.6 billion, and Air Lease Corporation (ALC) ordered 10 777-300ERs (extended range) jets, valued at $3.2 billion. Boeing's 787 Dreamliner battery malfunction is being corrected, as the test flight for the improved battery system went according to plan. (Source: Census Bureau, Advance Report on Durable Goods, March 26, 2013; Boeing Press Releases)
What This Means for You
A one percent increase in durable goods shipments means Gross Domestic Product (GDP) will probably also be moderate (1-2% growth) in the first quarter. However, the good news is that a 5.7% increase in orders means that the second quarter GDP report will be better, probably in the 2-3% growth range.
- Durable Goods as a Component of GDP
- Other Leading Economic Indicators
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