Capital Goods Orders Drop as Business Spending Cools

Orders for U.S. business equipment fell in February for the second time in three months, signaling corporate investment will be slow to gain momentum following an unusually harsh winter that put a damper on demand.

Bookings for nonmilitary capital goods excluding aircraft fell 1.3% after a 0.8% gain in January that was smaller than initially reported, data from the Commerce Department showed today in Washington. Demand for all durable goods, items meant to last at least three years, climbed a more-than-forecast 2.2%, reflecting the biggest gain in automobile demand in a year.

Frigid temperatures and snow across much of the country have muddied the outlook on the U.S. economy by restraining the housing rebound and consumer spending. That means companies will need to see additional proof that the recovery will accelerate in 2014 before expanding operations.

“Demand momentum has slowed somewhat,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York. “The bad weather and the winter probably aggravated the downturn somewhat.” Wang is the second-best forecaster of nondefense capital goods orders excluding aircraft.

Forecasts for durable goods orders in the Bloomberg News survey ranged from an increase of 3% to a 1.5% drop. January’s figure was revised to show a 1.3% drop from a previously reported 1% decline.

Excluding transportation equipment, where demand often is volatile month to month, orders increased 0.2 percent after a 0.9% gain in January.