Durable goods orders
Durable goods orders reflect new orders placed with domestic manufacturers for the delivery of factory hard goods in the near term. This report is published by the United States Census Bureau every month, and the required data is gathered through the United States Census Bureau’s Manufacturers’ Shipments, Inventories, and Orders (or M3) survey.
This is a voluntary survey authorized by Title 13 of the United States Code, and 3,000 American manufacturers from 92 categories participate in this survey. The latest report was released on March 23.
February durable goods orders increased by 3.1%
Durable goods orders for February 2018 beat all market expectations, increasing by 3.1% after a decline of 3.7% in January. The total increase in durable goods orders for 2017 was revised upward to 8.9%. The increase in durable goods orders in February was fueled by orders for commercial and defense aircraft (ITA).
The other contributor to the rise in orders was the transportation sector (IYT)—a highly volatile sector—which rose 1.2% in February. The other products orders, which included primary metals (XME), machinery (VIS), and fabricated metal products, witnessed modest growth. The computer and electronic (SOXL) products orders have declined marginally.
Impact of taxes and tariffs
This improvement in durable goods orders could be partially due to the tax cuts that became law in December 2017. Another factor was the shift in accounting standards that allow full expensing for business investments from the previous practice of depreciation over several years. There could be a further increase in investments as companies implement these business-friendly measures.