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.
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.