Collapse In Aircraft Demand Drove Down March Factory Orders – Stock Market Today

Orders for long-lasting factory goods fell sharply in March, driven by a collapse in demand for commercial aircraft and parts as the coronavirus spread around the world.

New orders for durable goods—products designed to last at least three years—declined 14.4% in March from the previous month, the biggest monthly drop since August 2014, the Commerce Department said Friday. New orders for February were revised to 1.1%.

Durable-goods orders are likely to decline further as the full effect of the coronavirus-related shutdowns becomes clear in the coming months.

Orders for commercial aircraft and parts fell by more than $16.3 billion, a 296% decline. Since orders are recorded on a net basis, the figure incorporates canceled orders. New orders for automobiles and parts fell 18.4% in March.

Excluding the volatile transportation sector, orders were down a more modest 0.2%. New orders for nondefense capital goods excluding aircraft—a closely watched proxy for business investment—were up 0.1%.

Analysts said the transportation sector appears to have been the first to bear the brunt of the economic shock related to the coronavirus. Other sectors will probably show similar sharp declines in the months ahead, said Gregory Daco, chief U.S. economist at Oxford Economics.

“We’re going to see steep drops across different categories,” he said.

The March durable goods data cover the month when the coronavirus outbreak started causing massive shutdowns across the U.S. economy.

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