Capital Goods Orders Fall 11.2% in February

According to the Census Bureau, real capital goods new orders in February 2014 were $81,099 million. February's new orders fell 11.2% compared to one year ago. The month-over-month rate of change has contracted in four of the last five months.  Over the last four months, the annual rate of change has been stuck between 3.8-4.7%. However, based on the monthly data, it appears that the annual rate of change will grow more slowly in the next few months.

A good leading indicator for real capital goods new orders is real consumer spending. Since May 2013, the annual rate of change in real consumer spending has been virtually flat. Although, it has technically ticked up ever so slightly in recent months. There are several historical instances where a constant rate of growth in consumer spending has indicated an accelerating rate of growth in real capital goods new orders. 

We use real capital goods new orders to forecast activity in metalcutting job shops, metalworking, and durable goods.