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Friday March 24 9:12 AM ET
Durables Orders Down Again in February
By Knut Engelmann
WASHINGTON (Reuters) - Orders for costly U.S. manufactured goods fell sharply in February, the second month of declines in a row, as demand for transportation equipment such as aircraft remained weak, the government said on Friday.
The Commerce Department said new orders for durable goods like cars, computers and appliances that are intended to last three years or more, fell 2.3 percent to a seasonally adjusted $208.45 billion. That was far weaker than analysts' forecast of a 0.2 percent decline.
January orders were revised downward to a decline of 2.2 percent from a previous estimate of minus 1.9 percent.
But compared to February of last year, orders were still up 7.3 percent, the department said, suggesting the manufacturing sector's recovery from the global financial crisis of 1997-99 remains well under way.
Monthly durable goods orders data are notoriously volatile and often undergo substantial revisions. Analysts said there was little in the February report to suggest that a slowdown in the booming U.S. economy is imminent.
``All of this is coming after a pretty lengthy period of strength,'' said Jay Feldman, an economist at Credit Suisse First Boston in New York. ``The rest of the economy is running red hot.''
Financial markets showed little reaction to the report, which came just days after the Federal Reserve bumped up key short-term interest rates for the second time this year in an ongoing effort to keep the buoyant economy from overheating.
Inflation-sensitive bond prices initially ticked up on the report, but quickly settled down again. The dollar was little changed against other key currencies.
The report said orders for transportation equipment fell a hefty 8.7 percent to $47.14 billion, led by a decline in aircraft and parts orders. The drop came on top of a 7.2 percent fall in that category in January.
Economists said those declines came after a strong surge in orders for aircraft manufactured by Seattle-based Boeing Co. (NYSE:BA - news), which was hit by a 38-day long strike by its engineers that ended only last week.
Industrial machinery and equipment -- a category that includes computers -- was down 4.6 percent to $40.63 billion. Orders for electronic and other electrical equipment, however, rose 6.4 percent to $39.71 billion in February, partly recovering from a 10.1 percent plunge in the previous month.
Shipments of finished products fell 1.8 percent to $205.71 billion, led by a decline in motor vehicles and parts. The drop more than outweighed a 1.5 percent increase in January.
At the same time, the orders backlog rose 0.5 percent to $519.04 billion, adding to January's 0.7 percent gain.
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