Published 18:26 IST, March 26th 2024

US durable goods orders show resilience in February

According to the Commerce Department's Census Bureau, orders for durable goods, which include items designed to last three years or more, increased by 1.4%.

Reported by: Business Desk
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US economic indicator: Orders for long-lasting manufactured goods rebounded more than expected in February, suggesting a potential improvement in business investment on equipment during the first quarter.

According to the Commerce Department's Census Bureau, orders for durable goods, which include items designed to last three years or more, increased by 1.4 per cent last month. This rise was primarily driven by upticks in transportation equipment and machinery orders.

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However, January's data was revised downward, indicating a steeper decline of 6.9 per cent instead of the previously reported 6.2 per cent. Economists surveyed by Reuters had forecasted a more modest increase of 1.1 per cent in durable goods orders.

Despite challenges posed by higher interest rates, which have dampened demand for goods, the manufacturing sector's outlook is gradually improving. Expectations of rate cuts by the Federal Reserve later this year are bolstering confidence in the sector, which constitutes 10.3 per cent of the economy.

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A recent survey by the Institute for Supply Management revealed a positive sentiment among manufacturers in March regarding sales and business conditions. Additionally, factory output showed signs of recovery in February.

Since March 2022, the US central bank has raised its policy rate by 525 basis points, bringing it to the current range of 5.25 per cent to 5.50 per cent.

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Nondefense capital goods orders excluding aircraft, which serve as a key indicator of business spending plans, increased by 0.7 per cent in February after a slight decline in the previous month. Meanwhile, core capital goods shipments fell by 0.4 per cent following an increase in January.

Overall, nondefense capital goods orders advanced by 4.4 per cent, with shipments rising by 2.7 per cent after a decline in January. These figures are crucial as they factor into the calculation of business spending on equipment in the gross domestic product report.

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(With Reuters inputs)
 

18:26 IST, March 26th 2024