Economic growth started strong early this year but has stalled, and a report for long-lasting goods, which will be released Wednesday, is expected to show one more sign of the economy weakening.
The durable goods indicator has been rising in recent months due to increased airline sales, but those sales slowed in March. Other economic indicators, such as the Institute for Supply Management’s manufacturing index, dropped to 51.3 last month compared with 54.2 in February. Orders for durable goods are expected to join the ranks of the disappointing numbers.
The stumble in the numbers will come after an encouraging report on orders in February, which saw the biggest increase in the last five months. The drop in March will have much to do with orders being filled at Boeing, the airplane manufacturing company. While 179 airplanes were ordered from Boeing in February, only 39 were ordered in March.
“If we’re right, durable goods will join host of other indicators that will be less than exciting,” said Avery Shenfield, an economist at CIBC World Markets.
Other indicators are the industrial production report, which showed a decline in March, and the economy also saw low home sales and a disappointing jobs report.
Though the output of durable goods declined by 0.2 percent in March, the numbers could be offset by a strong motor vehicle sector, which was a bright spot for the month. A report by the Board of Governors of the Federal Reserve System noted a surge in manufacturing in that sector, with a large gain in the output of motor vehicles and their parts.
However, jobs declined in manufacturing overall, according to the Bureau of Labor Statistics. Jobs were lost in the computer and electrical equipment sectors.
Boeing laid off 800 of its workers in March, partly due to the completion of several projects, and also due to workers being cut from the defense arm of the company, after budget cuts at the Pentagon.
With airplane orders down, some economists are excluding aircraft and focusing on non-defense capital goods orders to make predictions. Michael Carey, an economist at Credit Agricole CIB, said that he is expecting a three percent drop in durable goods orders, but if transportation is excluded he said there would be a minimal increase of 0.8 percent.
“What you see is that last month it picked up, so it’s been on this rising trend, which is what you want to see,” said Carey, adding that he expects the numbers will pick up later in the year.