Orders for durable goods in the United States experienced a significant increase in March, primarily driven by a surge in demand for commercial aircraft. According to the Commerce Department’s Census Bureau, orders for these long-lasting manufactured goods, which include items designed to last for three years or more, rose by 9.2% in March. This follows a downwardly revised increase of 0.9% in February. Economists surveyed by Reuters had anticipated a more modest rise of 2.0% for March, following a previously reported gain of 1.0% the previous month.
The backdrop for this uptick in orders is the ongoing trade conflict between the United States and China, initiated by President Donald Trump’s imposition of tariffs on Chinese imports, which reached as high as 145%. This move prompted retaliatory measures from Beijing. Additionally, Trump has enforced a 10% universal tariff on most trading partners and hinted at a potential 25% tariff on imported auto parts. These tariffs are intended to generate revenue to support tax cuts and revitalize the U.S. industrial sector.
However, experts express concern that reliance on imported raw materials may lead to fractured supply chains. Transportation equipment orders notably surged by 27.0%, largely due to a staggering 139.0% increase in commercial aircraft orders. Boeing reported a remarkable jump in its aircraft orders for March, reaching 192, compared to only 13 in February. However, the situation is complicated by recent directives from China, instructing its airlines not to accept any further deliveries of Boeing jets.
Some airline executives have also indicated a willingness to postpone aircraft deliveries to avoid tariffs, which poses challenges for Boeing’s recovery from a significant strike last year. Meanwhile, orders for non-defense capital goods, excluding aircraft, which serve as a barometer for business spending, saw only a slight rise of 0.1% in March. This followed a revised 0.3% decline in February. Shipments of these core capital goods increased by 0.3%, contributing to the calculations for business investment in the gross domestic product report.
Overall, growth projections for the first quarter are predominantly below a 0.5% annualized rate, raising concerns about potential economic contraction after a more robust 2.4% growth in the previous quarter.