Orders Hint at Weaker Spending

A government report Friday suggested weakness in business spending plans, with new orders for durable goods outside the volatile transportation sector falling short of forecasts.

The Commerce Department said new orders for U.S.-made durable goods rose 2.6% in February, twice the rate forecast.

New orders for durable goods excluding transportation fell 1.3%, well below Wall Street forecasts for a 0.9% rise. Transportation orders surged 13.4%.

The data strengthened arguments of analysts who think that the Federal Reserve’s campaign of interest rate hikes could be near its end.

Orders for nondefense capital goods excluding aircraft, a proxy for business spending, dropped 2.3% after a scant 0.3% rise in January. Wall Street analysts had expected a 1% increase.

“The durables, ex-transportation, was a pretty lousy number,” said John Beerling, regional foreign exchange trading desk manager at Wells Fargo in Minneapolis.

The durable goods report indicated orders for nondefense aircraft climbed 52.5% after a 70.1% drop in January, powering the transportation sector higher.

The Commerce Department revised upward January orders for durable goods -- expensive items meant to last at least three years -- although the drop remained steep. Durable goods orders fell 8.9% in January rather than the 9.9% previously reported, the department said.

Weakness was widespread outside of the civilian aircraft and defense sectors, and inventories fell 0.5% in February, the largest monthly decline since November 2003.