U.S. new orders for durable goods dropped 14.4 percent in March, slightly softer than the expected fall of 12 percent. Nevertheless, the fall was mainly focused in the transportation category, where bookings dropped 41 percent. Stripping the transportation component, bookings fell 0.2 percent, a surprisingly modest change given the possible influence of the coronavirus. The prior month’s data was downwardly revised, but the adjustments to growth of -0.1 percentage point overall and -0.2 percentage point ex-transportation were inconsequential.
The softness in the transportation category was widespread. Bookings for commercial aircraft stood out with a sharp fall of 295.7 percent, reflecting a negative reading on new orders. Subdued results for motor vehicles also added to the fall in transportation orders with a fall of 18.4 percent. Weak sales of new cars and trucks led to attempts by auto dealers to restrict inventory accumulation. Miscellaneous transportation orders also came in weak.
Stripping transportation, order flows appeared ordinary, a surprising development given the potential influence of the coronavirus. Many areas saw declines, but the magnitudes of several changes were not out of line with typical readings and most trends did not shift significantly.
New orders for nondefense capital goods other than aircraft rose 0.1 percent. Shipments for nondefense capital goods other than aircraft also held up reasonably well, indicating a fall of just 0.2 percent.
“The small change in shipments offered hope that investment in new equipment in the GDP report next week will not be disastrous in the first quarter”, said Daiwa Capital Markets in a research report.
