WASHINGTON- New orders for key US-made capital goods and shipments unexpectedly fell in February after nine straight monthly increases, but a rebound is likely as factory activity picked up early this month amid warmer temperatures.
The weak report from the Commerce Department on Wednesday joined a stream of other data in showing severe disruptions to economic activity wrought by last month’s deep freeze, including in Texas and other parts of the densely populated South region.
Economists are maintaining their lofty first-quarter gross domestic product growth estimates. Warmer weather, the White House’s $1.9 trillion COVID-19 pandemic rescue package and increased vaccinations are expected to boost activity in March.
“While the February figures have disappointed, there is nothing to be too concerned by,” said James Knightley, chief international economist at ING in New York. “Consumer spending is expected to rebound strongly in March and April on the latest stimulus payments, manufacturing will roar back given the strong order books and low inventory levels.”
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.8 percent last month. These so-called core capital goods orders gained 0.6 percent in January. Economists polled by Reuters had forecast core capital goods orders would rise 0.5 percent.
Core capital goods orders surged 8.5 percent on a year-on-year basis in February. The year-long coronavirus pandemic has boosted demand for goods, underpinning manufacturing, which accounts for 11.9 percent of the US economy.
A survey from data firm IHS Markit on Wednesday showed its flash US manufacturing PMI increased to 59 in the first half of this month from a final reading of 58.6 in February. A reading above 50 indicates growth in manufacturing. The survey’s new orders measure jumped to the highest since June 2014.