New orders for durable goods, items intended to last three years or longer, rose 3.1 percent in February following a 3.5 percent drop in January. Over the past 12 months, total durable-goods orders are up 8.9 percent. Durable-goods orders tend to be volatile from month to month, but orders have established a solid uptrend since hitting a recent low of $211.5 billion in June 2016 (see chart). For the month of February, total durable-goods orders were $247.7 billion, a rise of 17.1 percent since the June low.
Among the seven major categories, transportation equipment led the gain in February with a 7.1 percent increase. Within the transportation category, aircraft orders had large gains, with nondefense aircraft orders up 25.5 percent and defense aircraft orders up 37.7 percent. Aircraft orders tend to be extremely volatile, with both categories posting double-digit declines in January and double-digit gains in December. Motor vehicles and parts, the largest component in transportation equipment, rose 1.6 percent for the month and is up 6.2 percent from a year ago.
Primary metals (up 2.7 percent), fabricated metals (up 0.8 percent), machinery (up 1.6 percent), electrical equipment (up 2.6 percent), and all other durables (up 0.9 percent) all had gains for the month. Computers and electronic products was the one category to have a decline in new orders in February, dropping 0.2 percent versus January. Over the last 12 months, all seven major categories of durable-goods orders show a gain.
Orders for capital goods (durable goods considered to be investment) rose 5.8 percent in February and were up 13.0 percent for the first quarter. Excluding defense-related items, capital goods rose 4.5 percent in February and show a 9.9 percent gain from a year ago. Nondefense capital-goods orders benefitted from the strong performance of new nondefense aircraft orders, which have registered a 19.6 percent rise over the last 12 months. When aircraft are excluded, new orders for nondefense capital goods, an input into the calculation of gross domestic product and a key indicator for business investment, rose 1.8 percent in February and 8.0 percent from a year ago.
On balance, the details of this report send a positive signal for the overall economy and for business investment.