Photo credit: www.cnbc.com
In March, companies significantly increased their orders for durable goods in anticipation of impending tariffs threatened by President Donald Trump on imports to the U.S., according to a report from the Commerce Department released on Thursday.
Orders for durable goods saw a substantial increase, rising a seasonally adjusted 9.2% over the month. This marked a notable rise from the 0.9% gain recorded in February and greatly exceeded the Dow Jones forecast, which had predicted a more modest 1.6% increase. When defense orders are excluded, the uptick was even more pronounced at 10.4%, although orders excluding transportation equipment remained unchanged.
Transportation equipment orders, in particular, experienced a robust surge of 27%, largely driven by an exceptional 139% increase in nondefense aircraft and parts. The category of durable goods encompasses a wide range of items, including automobiles, appliances, computers, and jewelry.
In related economic news, the Labor Department reported a rise in initial claims for unemployment insurance, which reached a seasonally adjusted total of 222,000 for the week ending April 19. This represented an increase of 6,000 claims but was in line with analysts’ predictions of around 220,000.
The dramatic increase in durable goods orders is seen as a front-loading phenomenon as businesses reacted to the potential impact of tariffs throughout March. With the announcement of Trump’s “Liberation Day” tariffs on April 2, which included a 10% tariff on all imports and specific duties against numerous countries, businesses rushed to place orders before the anticipated price increases.
A report from the Federal Reserve, compiled on Wednesday, reinforced the notion that companies were modifying their purchasing strategies in light of the tariffs. Dubbed the “Beige Book,” this economic summary highlighted a notable rise in vehicle sales—part of the durable goods sector—largely attributed to consumer urgency to buy before expected price hikes due to tariffs.
However, the Beige Book also pointed to a growing concern among businesses regarding economic conditions amidst the tariff threats, suggesting that the spike in durable orders may not reflect broader long-term economic health.
On the labor market front, the unemployment claims report indicates that layoffs remain steady despite Trump’s initiatives to reduce the federal employment workforce. Alongside the stable initial claims, continuing claims—which provide a snapshot from the previous week—showed a decline to 1.84 million, down by 37,000 from the week before. Notably, claims from Washington, D.C. fell to 753, a drop of 112 from the prior week based on unadjusted figures.
Source
www.cnbc.com