Demand for big-ticket manufactured goods fell less than expected in March, raising some hopes that the long slide in manufacturing is nearing an end.
The Commerce Department said Friday that orders for durable goods dropped 0.8 percent last month, about half the 1.5 percent decline that economists expected. A rise in orders for commercial and military aircraft helped cushion weakness elsewhere.
The small drop followed a 2.1 percent increase in orders in February. That was the first gain after six straight monthly declines.
While February’s results were revised down from an earlier estimate of a 3.5 percent gain, that rise in orders followed by only a small drop in March show some faint signs of life in manufacturing.
Still, economists cautioned the best that can be expected is for industrial production to stabilize. They do not expect a rebound from the current low levels anytime soon given all the problems facing the economy.
“The bottom line here is that it is still impossible to tell whether the sharp slowing in the rate of decline of core orders in February-March is simply a correction after the horrors of the previous few, post-Lehman months, or the start of a genuine stabilization,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.
U.S. manufacturers have been hurt by a steep drop in demand at home and from major overseas markets, which face their own recessions.
Demand for transportation products fell 1.4 percent in March, reflecting a continued slide in orders for motor vehicles, which fell 1.7 percent.
That weakness was offset somewhat by increases of 4.4 percent in demand for commercial aircraft and 4.7 percent in orders for military aircraft. Even with the increase in orders for commercial aircraft, they remain sharply lower than a year ago as the global recession has depressed demand worldwide.
Excluding transportation, orders fell 0.6 percent last month, just half of the 1.2 percent decline that had been expected.
Still, demand fell for primary metals such as steel, and for orders of machinery and computers.
While non-defense capital goods excluding aircraft — viewed as a good proxy for business investment plans — rose 1.5 percent, they also were significantly lower than a year ago as businesses have slashed efforts to expand and modernize.
The overall economy, as measured by the gross domestic product, fell at an annual rate of 6.3 percent in the fourth quarter, the biggest decline since 1982. Economists believe the GDP fell almost as sharply in the January-March quarter. They expect a smaller fall in the current quarter as the recession becomes the longest in the post-World War II period.
Paul Ashworth, senior U.S. economist at Capital Economics, said the durable goods data “fits within the broader pattern that we are seeing: the severity of the recession is easing gradually, but any actual recovery is still some way off.”
The lengthy downturn already has resulted in more than 5 million jobs lost in the U.S. since December 2007, and companies still are announcing mass layoffs and extended plant shutdowns.
General Motors Corp. on Thursday said it will temporarily close 13 assembly plants in the U.S. and Mexico, laying off more than 26,000 workers. The closures, which will start in May, will be as short as three weeks to as long as 11.