WASHINGTON (Reuters) - New orders for long-lasting U.S. factory goods increased only modestly in February, supporting the view that economic growth in the first quarter could be lackluster.
Durable goods orders rose 2.2 percent last month, missing economists’ forecasts and only partially reversing January’s sharp decline, Commerce Department data showed on Wednesday.
A gauge of future business investment also fell short of forecasts.
“The economy is slowly improving, but it is definitely a halting recovery where we’re not accelerating to any great degree,” said Liam Dalton, president of Axiom Capital Management in New York.
Manufacturing has been a key support for the United States’ recovery from the 2007-2009 recession, and a recent acceleration in job growth has boosted hopes that extra income will create a virtuous cycle that leads to more spending.
But economists have also been puzzled by a steep fall in the unemployment rate given generally weak economic growth. The jobless rate has dropped to 8.3 percent from 9.1 percent in August.
U.S. Federal Reserve Chairman Ben Bernanke said on Monday that growth probably needs to pick up for the unemployment rate to fall further. He reinforced his point on Tuesday, saying it was too soon to declare victory in the recovery and declining to rule out further action to spur stronger growth.
The durable goods data backs the view that growth will slow in the first quarter to around a 2-percent annual rate, said Capital Economics economist Paul Ashworth. That pace would generally be seen as too weak to lower unemployment.
Business executives, however, are feeling more optimistic. A survey released by the Business Roundtable on Wednesday showed U.S. chief executives’ economic outlook brightened in the first quarter, with a growing number planning to hire more workers and invest more in capital equipment.
In the fourth quarter, efforts by companies to restock shelves helped gross domestic product expand at a 3.0 percent annual rate. As the impetus from restocking fades, factory output will slip absent a pick-up in orders.
The durables goods data suggested the factory sector might not be growing as fast as analysts expected. U.S. stocks fell after the data, and U.S. government debt prices were little changed.
Economists expected orders for durable goods, which are items from toasters to aircraft that are meant to last three years or more, to rise 3.0 percent in February.
Excluding transportation-related items, orders climbed 1.6 percent.
Orders for non-defense capital goods, excluding aircraft, a closely watched proxy for future business investment, edged 1.2 percent higher, missing analysts’ expectations of a 2.0 percent gain. They fell 3.7 percent in January.
A 3.9 percent increase in bookings for transportation equipment in February, including a 6.0 percent jump in civilian aircraft orders, helped drive overall orders higher. Boeing received 237 orders for aircraft during the month, according to the plane maker’s website, up from 150 in January.
In a separate report, the Mortgage Bankers Association said its gauge of loan requests for home purchases rose 3.3 percent in the week ended March 23, the latest sign of rekindling activity in the housing market.
Weakness in housing has been a major drag on the recovery since a bubble in home prices popped and triggered a financial crisis. The increase in home loan applications came despite fixed 30-year mortgage rates rising to their highest level since November.
Additional reporting by Ryan Vlastelica in New York; Editing by Andrea Ricci and Padraic Cassidy