U.S. Crucial Capital Goods Notice Spike in Orders

New orders for crucial U.S.-made capital goods unexpectedly surged in March, but the gains are unlikely to be sustainable amid the novel coronavirus pandemic, which has virtually shut down the country and contributed to a falll in crude oil costs.

U.S. Crucial Capital Goods Notice Spike in Orders

Despite the slight pickup in demand posted by the Commerce Division Friday, shipments of these goods dropped further in March, suggesting that a downturn in business investment persisted into Q1 and would contribute to what economists expect would be the sharpest economic contraction since the Great Recession.

Orders for non-defense capital goods excluding plane, a carefully watched proxy for enterprise spending plans, inched up 0.1% in March. Data for February was revised up to show these so-called crucial capital items orders falling 0.8% instead of dropping 0.9% as previously reported.

Economists surveyed had forecast core capital goods orders dropping 6.0% in March. Crucial capital goods orders increased by 1.0% on an annual basis in March.

The economic picture is deteriorating rapidly amid nationwide lockdowns to regulate the spread of COVID-19, the potentially deadly respiratory illness attributable to the virus. A record 26.5 million Americans have filed for unemployment benefits since mid-March. Retail sales, homebuilding, business activity and consumer confidence have weakened sharply.