March U.S. Durables Orders Show Mixed Picture

In a hopeful but mixed sign for the manufacturing economy -- a huge customer base for the trucking industry – the U.S. Commerce Department said Wednesday that overall new orders for durable goods from U.S. factories rose 3% in March.

That was the largest gain since November, and appears to be in line with recent signals that the factory sector has seen mild improvement from what had been a steady stream of bad news.

However, factories got a big boost from a 21.4% rise in transportation-related orders, including ships and tanks. When defense-related goods were removed, durables were up only 0.9%, Reuters noted.

The Associated Press added that transportation equipment orders can swing sharply month to month.

Economists trying to gauge the health of the factory sector like to look at durable goods orders minus transportation, AP noted. That figure fell 1.8% in March for its fourth straight decline. So, the gains did not extend across most categories of goods designed to last more than three years.

Separately, Commerce reported that sales of new homes rose 4.2% in March to a record annual rate of 1.02 million. And the National Association of Realtors said sales of existing homes increased by 4.8% last month.

That could reflect new interest in housing as mortgage interest rates declined in the wake of three half-point rate cuts by the Federal Reserve. The Fed made another such cut last week, which could further spur housing data for April.

The pickup in housing demand can stimulate truck hauls of building materials for new construction and for appliances and furniture as people move into new or existing homes.

And while the broad factory sector still showed weakness in durable goods orders outside of transportation, even the limited pickup in orders for March brings good news about future shipments for certain trucking companies.

For those factories enjoying growth, their flatbed or dry-van haulers, and vehicle haulers, will carry raw materials and parts into plants or bring finished goods back out to warehouses or retail stores.

But analysts have recently been warning against taking too much hope for the overall economy from figures on auto production, which has rebounded some to rebuild inventory after very deep cuts in previous months.

What is not clear for now is whether the gains in autos and some other types of manufacturing will be sustained.

Dismal reports in the past week of declines in April consumer sentiment stand out as a warning that consumer spending may continue to weaken in the months ahead, which will weigh on overall factory demand. And a number of manufacturers have continued during April to announce cuts in output and jobs, especially in high-technology gear.

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