Weak aircraft sales drive US durable goods slump in February

This is the second monthly slowdown for the aircraft sector. — Reuters pic
This is the second monthly slowdown for the aircraft sector. — Reuters pic

WASHINGTON, April 2 — Sales of big-ticket US manufactured goods sank unexpectedly in February, with a sharp drop in aircraft sales, and weakness in key sectors like autos and industrial equipment, the government reported today.

The sudden dip, which came with a downward revision to , marked the second monthly slowdown for the sector and could weigh on GDP growth in the first quarter of 2019.

A closely-watched measure seen as a proxy for business investment also fell, reversing January’s gains, according to the Commerce Department.

Total orders for US durable goods fell 1.6 percent from January to US$250.6 billion (RM1.02 trillion), the lowest level since October, which represented a far steeper decline than the 0.9 per cent decrease that economists had been expecting.

Orders for civilian aircraft, a sector largely dominated by Boeing that sees big swings from month to month, fell 31.1 per cent after two months of gains.

As the numbers were recorded in February, they will not reflect the fall-out from the March 10 crash of a Boeing 737 MAX 8 plane in Ethiopia, which caused global authorities to ground the plane and Boeing to suspend deliveries.

Sales of autos were 0.1 per cent lower, marking the second month in the red for the key US sector.

Excluding the volatile transportation category, durable goods orders were up a tepid 0.1 percent for the month, undershooting analyst forecasts for a 0.1 per cent gain.

Orders for machinery, computers, communications equipment and defense articles all fell while some gains were recorded in primary metals and metal fabricated products as well as electrical equipment and products.

But non-defense capital goods excluding aircraft—a measure seen as a proxy for investments in equipment for factories and oil drilling equipment—fell 0.1 per cent, the third decline in four months.

Such capital spending is crucial to industrial output and hiring, economists say.

Ian Shepherdson of Pantheon Macroeconomics said survey data suggested the declines in capital expenditures had likely stabilized.

“We’re sticking to our view that business spending on equipment will be very soft in the first and second quarters, but the second half should be better,” he said. — AFP

Source: The Malay Mail Online

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