U.S. factories reported a bigger-than-expected drop in new orders for long-lasting machinery and equipment in February, driven by a plunge in aircraft orders even before the Ethiopian Airlines crash of a Boeing (BA) - Get Report 737 MAX plane in March.
Orders for manufactured durable goods fell by 1.6% to $250.6 billion, the U.S. Census Bureau reported on Tuesday. Economists surveyed by the data provider FactSet had expected a 0.8% drop, on average. In January, durable goods orders rose by a revised 0.1%.
Transportation equipment orders, including aircraft, fell by $4.3 billion, or 4.8%, according to the Census.
The Boeing plane crash, which happened in March, could weigh on orders in coming months' reports, according to economists with the German lender Deutsche Bank. Shares of the Chicago-based airplane maker tumbled 13% during March.
"While some of the weakness in aircraft orders" in February "could be attributable to cancellations in the wake of the recent plane crash, any weakness stemming from this event would be more likely to show up in subsequent data," the Deutsche Bank economists wrote in a March 29 note.
Excluding transportation equipment, durable goods orders increased by 0.1%, roughly on par with analysts' estimates.
Economists scrutinize new orders for durable goods -- typically expensive items designed to last for three years or more, including machines, cars, refrigerators and bricks -- to gain valuable insight into whether executives are investing capital in new factories, equipment or future business expansions.
Such investments typically lead to higher worker productivity, so they can help to reduce the risk of a sudden spike in inflation.
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