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Durable goods orders plunged in March as demand for aircraft fell

April 24, 2013|By Jim Puzzanghera
  • Glennon Doyle, a craftsman at Michael Rybovich & Sons Boat Works, laminates mahogany planks that will be shaped to form the stem of an 86-foot sports fishing boat in North Palm Beach, Fla.; the durable goods industry in the U.S. took a hit in March.
Glennon Doyle, a craftsman at Michael Rybovich & Sons Boat Works, laminates… (Mark Elias / Bloomberg )

WASHINGTON -- Orders for long-lasting goods, such as aircraft and computers, unexpectedly plunged 5.7% in March -- the largest drop in seven months -- in a new sign of a spring economic slowdown.

New orders for so-called durable goods were down $13.1 billion in March to $216.3 billion compared to February, the second drop in the last three months, the Commerce Department reported Wednesday.

The government also revised down February's increase, to 4.3% from the initially reported 5.7%.

Analysts had expected a more modest drop in March. The median projection of economists surveyed by Bloomberg was for a 3% decline.

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"Activity seems to have slowed the world over in March, which may have been affected by the late winter chill," said Chris Rupkey, chief financial economist for the Bank of Tokyo-Mitsubishi in New York.

Slumping demand for aircraft led to the big durable goods drop in March, the largest monthly decline since a 13.1% drop in August. Orders for transportation goods were down 15% in March, fueled by a 48.2% drop in civilian aircraft and parts.

Boeing Co. had 39 new aircraft orders in March after receiving 179 the previous month, Rupkey said.

Paul Edelstein, director of financial economics at IHS Global Insight, noted civilian aircraft orders can be volatile. Excluding transportation goods, new orders were down 1.4% in March, the Commerce Department said.

"The headline numbers appear worse than they are," he said. "Once volatile aircraft and defense orders are excluded, orders for capital equipment were basically flat in March, with strength in computers and electronics offsetting weakness in machinery and metals."

But Edelstein said the new figures "largely confirm what we already know – that the economy hit a soft patch in March that will likely persist for a couple of quarters."

 US Durable Goods New Orders Chart

US Durable Goods New Orders data by YCharts


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