WASHINGTON (Reuters) – New orders for U.S.-manufactured goods increased solidly in February, likely as businesses front-loaded orders ahead of tariffs.
Factory orders rose 0.6% after an upwardly revised 1.8% rebound in January, the Commerce Department’s Census Bureau said on Wednesday. Economists polled by Reuters had forecast factory orders would climb 0.5% after a previously reported 1.7% advance in January. Factory orders gained 1.5% on a year-on-year basis in February.
Manufacturing, which accounts for 10.2% of the economy, could be crippled by President Donald Trump’s barrage of tariffs since returning to the White House in January.
Trump promised to announce global reciprocal tariffs on Wednesday, which he has dubbed “Liberation Day.” He sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base. Economists disagree and view the import duties as harmful.
An Institute for Supply Management report on Tuesday showed its manufacturing PMI slipped back into contraction territory in March after two straight months of expansion, with businesses overwhelmingly expressing concerns about tariffs.
Domestic manufacturers rely heavily on imported raw materials. The import taxes are expected to increase production costs, which are passed on to buyers of the finished products. Companies could also lay off workers to protect profit margins.
Commercial aircraft orders slipped 5.0%. Orders for motor vehicles, parts and trailers increased 1.9%. Transportation equipment orders advanced 1.5%. Orders for computers and electronic products were unchanged, while those for electrical equipment, appliances and components rebounded 1.9%.
Machinery orders increased 0.6%. Excluding transportation equipment, factory orders rose 0.4%.
The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 0.2% in February rather than 0.3%, as estimated last month.
Shipments of core capital goods jumped 0.8%, revised down from the previously reported 0.9%. Business spending on equipment is expected to rebound in the first quarter after contracting in the fourth quarter.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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