U.S. Factory Orders Steady in February for Second Month

• Commercial aircraft orders plunged 28.6%, dragging down overall factory orders, while computers, electronics, machinery, and metal products posted gains
• Core capital goods orders (non-defense excluding aircraft), a key indicator of business investment, were revised up to 0.7% growth in February with shipments rising 1.0%
• Manufacturing recovery from tariff impacts now threatened by oil prices that have surged more than 30% due to the U.S.-Israeli conflict with Iran

U.S. Factory Orders Hold Steady in February Amid Mixed Sector Performance

U.S. factory orders remained flat in February for the second consecutive month, according to the Commerce Department's Census Bureau. The unchanged reading exceeded economists' expectations of a 0.2% decline, while year-over-year orders increased 3.7%.

Key Sectoral Movements:

• Commercial aircraft orders plummeted 28.6%, offsetting gains in other sectors
• Positive growth recorded in computers and electronic products, machinery, primary metals, and fabricated metal products
• Core capital goods orders (non-defense capital goods excluding aircraft) revised upward to 0.7% growth from 0.6%
• Core capital goods shipments increased 1.0%, slightly above the previously reported 0.9%

Market Context:

Manufacturing represents 10.1% of the U.S. economy and had been showing recovery signs after being impacted by President Trump's tariffs. However, new headwinds have emerged from the U.S.-Israeli war with Iran, which has driven oil prices up more than 30%, potentially threatening the sector's recovery momentum.

Data Timeline:

The report, released April 10, reflects February data. The Census Bureau continues addressing delays from last year's government shutdown, causing a backlog in data releases.

Implications:

The resilient factory orders data, particularly the upward revision in core capital goods—a key indicator of business investment—suggests underlying strength in manufacturing activity. However, the sharp decline in aircraft orders and surging oil prices present significant concerns for sustained recovery. Investors should monitor how elevated energy costs and geopolitical tensions affect manufacturing demand and business spending plans in coming months.