Capital goods orders drop as U.S. business spending cools
Orders for U.S. business equipment fell in February for the second time in three months, signaling corporate investment will be slow to gain momentum following an unusually harsh winter that put a damper on demand.
Bookings for non-military capital goods excluding aircraft fell 1.3 per cent after a 0.8 per cent gain in January that was smaller than initially reported, data from the Commerce Department showed today in Washington. Demand for all durable goods — items meant to last at least three years — climbed a more-than-forecast 2.2 per cent, reflecting the biggest gain in automobile demand in a year.
Frigid temperatures and snow across much of the country have muddied the outlook on the U.S. economy by restraining the housing rebound and consumer spending. That means companies will need to see additional proof that the recovery will accelerate in 2014 before expanding operations.
“We’re fairly convinced the soft patch we’re seeing is temporary,” Doug Handler, chief U.S. economist at Lexington, Massachusetts-based IHS Global Insight, said before the report. “We still have a crummy quarter to get through.”
Macroeconomic Advisers thinks that this “crummy quarter” will come in showing an annualized growth rate of 1.4%.
Zero Hedge notes:
… the long overdue CapEx recovery continues to not appear, and in fact in February, Capital Goods non-defense ex aircraft tumbled 1.5% compared to expectations of a 0.5% rise, with the January increase of 1.7% cut by more than half to just 0.8%.
The Census Bureau’s report shows a truly unimpressive increase overall and significant decreases in many categories in year-over-year (Feb. 2014 vs. Feb. 2014) new orders.