US durable goods orders plummet amid lower demand for jets and autoomobiles

Orders in the US for goods made to last more than three years crashed lower last month amid huge drops in those for civilian aircraft and those for automobiles and parts.

According to the Department of Commerce, in seasonally adjusted terms, orders for durable goods shrank by an outsized 14.4% month-on-month in March to reach an annualised pace of $213.18bn.

That compared to a 11.1% decline anticipated by economists.

The decline was nearly completely accounted for by the 41% slide in orders for transportation equipment to $51.24bn.

Orders for motor vehicles and parts dropped by 18.4% to $49.0bn, while those for civilian aircraft and parts were 296% lower at -$16.34bn.

Conspicuous however was a 0.1% on the month increase (consensus: -3.3%) in orders for capital goods excluding civilian aircraft and defence, often considered a lead indicator of true underlying investment demand, to $68.9bn.

"The March numbers were better than we expected; presumably, it takes a bit of time for management decisions to cut spending to filter into the hard numbers," said Ian Shepherdson at Pantheon Macroeconomics.

"The pre-Covid trend in core capital goods orders was flat, following a year of minimal earnings growth, though we were beginning to look for an improvement in the spring. That’s not happening; instead, we expect April core capex orders to crater, falling perhaps 20-to-30%. The worst month after the crash of 2008 was -11.1% in January 2009."