- Barclays
After a small rebound in January, new orders for US factory goods declined in February and business spending on capital goods was much weaker than initially estimated, the latest sign that economic growth remained weak in the first quarter. According to the Commerce Department, new orders for manufactured goods fell 1.7% as demand decreased broadly, reversing January's downwardly revised 1.2% gain. There was weakness in a number of categories, led by a sharp drop in the volatile category of commercial aircraft. Demand for durable goods, everything from airplanes to computers and household appliances, dropped 3% in February, slightly worse than the 2.8% estimate. Orders in a category that serves as a proxy for business investment were down 2.5% following a 3.3% increase in January.
The report underscores how US manufacturers are struggling with moribund global demand and a strong US Dollar, which makes American goods less competitive on overseas markets. On top of that, the sharp plunge in oil prices has resulted in dramatic cutbacks in investment spending in the energy industry. The Institute for Supply Management reported last week that its closely watched manufacturing index climbed to 51.8 in March, up from 49.5 in February.
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