Factory Orders: Upward Momentum Waning

Bottom Line: After a strong 4th Quarter, the manufacturing sector of the economy was mostly flat in the first two months of the first quarter. Still, the core metrics most relevant to GDP suggest this sector should continue to add to GDP in the 1st Quarter, though with gains slower than those of the 4th Quarter. Factory Orders ROSE by 1.2% in February, compared with market expectations for an increase of 1.7%. The prior month's loss was revised higher from -1.4% to -1.3%. Durable goods orders climbed by 3.0%, as previously reported, while nondurable goods orders slipped by 0.5%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders were nearly unchanged. Factory orders are now 7.1% ABOVE their year ago level but the year-over-year growth rate has declined little changed over the past year (from 7.6% a year ago to the current 7.1%). The January/February average is modestly above its Q4 level, suggesting a modest increase in equipment spending in Q1.