US durable goods orders drop 2.8 percent in February

Yet January’s gain was revised down to 4.2%, as the increase in orders outside transportation was cut to 1.2% from 1.8%.

Orders for durable goods fell in February for the third time in four months, reflecting a broad-based slowdown that underscores lingering softness in US capital investment.

Orders rose 4.7% in the prior period, led by a jump in civilian aircraft. Commercial aircraft, a volatile category, fell 27.1 percent after surging 48.6 percent in January.

Economist Ian Shepherdson at Pantheon Macroeconomics said while the print was a disappointing, the core capex trend was flat, not down, and predicted a March rebound was a safe bet.

Excluding orders for transportation equipment, durable goods orders slid by 1.0% in February after climbing by 1.2% in January. The sector is being hurt by economic weakness in major export markets and a strong dollar. Forecasting firm Macroeconomic Advisers lowered its projection to 1.5% from an earlier estimate of 1.9% growth.

The factory sector has been buffeted over the past year by reduced demand for drilling and mining equipment following low oil prices, tepid overseas demand and a strong dollar that has made U.S.-produced goods more expensive for foreign buyers.

A four-day streak of gains in the United States dollar is in jeopardy after weak durable goods numbers.

The economy grew at a 1.0 percent rate in the fourth quarter, according to data released last month.

“GDP growth will not be getting much help from business spending in the near future”, said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, N.C. Only bookings for motor vehicles and computers rose in February. Applications for jobless benefits have now been below 300,000, a threshold associated with healthy labor market conditions, for 55 weeks, the longest stretch since 1973. The central bank wants to see economic activity expanding at “a moderate pace” and ongoing improvement in the labor market to support its plans for gradually increasing short-term interest rates. Workforce participation also edged higher, a sign that once-discouraged job seekers may be coming off the sidelines.

-Ben Leubsdorf contributed to this article.