WASHINGTON (Reuters) -Orders for long-lasting U.S. manufactured goods surged in March on strong demand for commercial aircraft, but activity elsewhere was muted, likely as businesses exercised caution against the backdrop of a darkening economic outlook caused by tariffs.
Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 9.2% last month after slightly downwardly revised 0.9% gain in February, the Commerce Department’s Census Bureau said on Thursday.
Economists polled by Reuters had forecast durable goods orders advancing 2.0% after a previously reported 1.0% gain in February.
The United States and China are embroiled in a trade war after President Donald Trump raised tariffs on Chinese imports to 145%, prompting retaliation from Beijing. Trump has also imposed a 10% universal tariff on nearly all trading partners and has threatened a 25% duty on imported auto parts.
A raft of tariffs have been imposed on other goods, including lumber, motor vehicles, steel and aluminum.
Trump views the tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base. But domestic manufacturing is heavily reliant on imported raw materials and economists have warned the duties will fracture supply chains.
Transportation equipment orders soared 27.0%, boosted by a 139.0% jump in commercial aircraft orders, which are extremely volatile. Boeing reported on its website that it had received 192 aircraft orders in March, up from 13 in February.
But China this month ordered its airlines not to take further deliveries of Boeing jets, and some airline CEOs have said they would defer plane deliveries rather than pay duties, which could undermine the plane maker’s recovery from a crippling strike last year.
Two Boeing planes destined for China recently returned. Boeing CEO Kelly Ortberg, however, said on Wednesday that the company had avoided broader damage from tariffs and could redirect jets to other airlines that have been “asking for additional airplanes.”
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, edged up 0.1% in March after revised 0.3% drop in February. These so-called core capital goods orders were previously reported have declined 0.2% in February.
Shipments of core capital goods rose 0.3% after rebounding 0.7% the prior month. These shipments go into the into the calculation of the business spending on equipment component in the gross domestic product report. Business investment in equipment contracted in the fourth quarter.
Growth estimates for the January-March quarter are mostly below a 0.5% annualized rate and the odds of a contraction are high. The economy grew at a 2.4% pace in the fourth quarter.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
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