After plummeting in January, durable goods orders rebounded more than expected in February from the initial value due to increased orders for transportation equipment and machinery, indicating a steadily improving outlook for the manufacturing industry.

On Tuesday, March 26, the U.S. Department of Commerce released data showing that U.S. durable goods orders in February increased by 1.4% from the initial value, a sharp rebound from the previous value. The expected value was 1.2%. The previous value in January was further revised down to -6.1%. -6.9%.

U.S. core capital goods orders in January—non-defense capital durable goods orders excluding aircraft—increased 0.7% month-on-month in February, the first increase in three months, exceeding expectations of 0.1%. The previous value was revised upward to 0.4% from 0%. The core capital goods orders data is closely watched as it measures business spending plans.

Among them, shipments of core capital goods rebounded strongly, increasing by 2.7% month-on-month, reversing the previous decline of 3.0%. However, the increase was more driven by seasonal factors - shipments fell by 0.4% month-on-month after seasonal adjustment. Shipments from this segment are included in the calculation of equipment spending in U.S. gross domestic product (GDP) reports.

Durable goods are goods that do not wear out quickly and have a useful life of at least three years, such as cars, computers, home appliances, aircraft, communications equipment, and they represent an important part of business investment expenditures.

Non-defense aircraft orders rebound, computer and automobile orders increase

The sequential rebound in durable goods data was mainly driven by increased orders for transportation equipment and machinery. In February, orders excluding transportation durable goods increased by 0.5% from the initial value, exceeding the expected value of 0.4%, and rising by 1.3% year-on-year. The previous value was revised from -0.4% to -0.3%.

The impact of Boeing's "aircraft door" seems to have subsided. Non-defense aircraft orders increased by 24.6% month-on-month, and defense spending fell by 12.7% month-on-month.

Driven by the rise in artificial intelligence, computers and electronic products surged again month-on-month.

In addition, orders for metal and metal parts, automobiles and parts have increased, driving the overall growth of orders; shipments of manufactured goods have declined, which may have a certain impact on GDP in the first quarter.

Analysts said that after experiencing the downturn in previous years, the manufacturing industry, which accounts for 10.3% of GDP, has shown initial signs of recovery, but a full recovery is unlikely before the Federal Reserve begins to cut interest rates.

Ali Jaffery, an economist in the Economics Department of the Canadian Imperial Bank of Commerce, said:

"Restrictive monetary policy continues to weigh on physical investment."

Market Reaction

After the data was released, the U.S. dollar index and the three major U.S. stock index futures saw little fluctuation in their pre-market gains.

Spot gold basically maintained its upward trend, rising more than 1% during the day to temporarily trade at $2,194 per ounce.