WASHINGTON -- Orders to U.S. factories for big-ticket manufactured goods fell 1.6 percent in February, the biggest drop in four months, reflecting a plunge in the volatile commercial aircraft category. Demand in a key sector used to track business investment decisions also declined in February.
The Commerce Department said on Tuesday that the February decline came after a small 0.1 percent rise January and was the weakest showing since a 4.3 percent fall in October. Orders in a category that serves as a proxy for business investment plans edged down 0.1 percent in February after a 0.9 percent advance in January.
The manufacturing sector has been strained for the past few months, reflecting a global economic slowdown and rising trade tensions which have hurt U.S. exports. But there have been more hopeful signs recently.
The Institute for Supply Management reported on Monday that its manufacturing index rose to 55.3 in March, up from a reading of 54.2 in February, with employment gains in manufacturing a key driver of the increase. Analysts said factories are hiring to make sure they can meet demand in the coming months.
The report on new orders for durable goods, items expected to last at least three years, showed that much of the overall weakness came from a 31.1 percent plunge in orders for commercial aircraft, a drop that followed healthy gains in the past two months.
Orders for motor vehicles and parts dipped a small 0.1 percent after a 0.5 percent decline in January.
Demand for machinery fell 0.3 percent while orders for computers and electronic products fell 0.3 percent.
U.S. manufacturers have faced a number of challenges over the past year including trade wars begun by President Donald Trump. Trump is trying to pressure China and other nations to open their markets to more U.S. exports, but Trump's imposition of tariffs on foreign goods has prompted other countries to levy retaliatory tariffs on U.S. products. U.S. and Chinese negotiators are to meet in Washington this week to continue looking for a way to reach a trade deal that would remove the threat of higher tariffs.
Meanwhile, most major automakers capped the first quarter with declining U.S. sales again in March.
Fiat Chrysler, Nissan and Toyota each reported deliveries dropped for the month and are down year-to-date. General Motors, which releases results only on a quarterly basis, said sales slumped across all four of its brands.
The lone standout among the largest car makers in the U.S. was Honda Motor Co., which posted gains for the month and quarter, driven by the CR-V crossover and all-new Passport sport utility vehicle.
Shares of Ford, which releases its quarterly sales results Thursday, fell as much as 0.8 percent before closing up 0.3 percent, while GM's were little changed and Fiat Chrysler's were up 1.2 percent Tuesday in New York.
While SUVs and big trucks carried the industry to a surprise gain in 2018, key models in those segments are sputtering early this year. Fiat Chrysler's Ram pickup may have been the only full-size truck line to increase deliveries for the quarter, as GM continued to build up inventory of its redesigned Chevrolet Silverado and GMC Sierra models.
First-quarter deliveries dropped for every Jeep SUV except the top-selling Grand Cherokee model, while Toyota's RAV4 and Nissan's Rogue crossovers also slumped.
Meanwhile, the sedans that have seen demand crater the past few years are showing early signs of bottoming out. Honda, which said in January that trucks and SUVs may be reaching their limits as a share of industry sales, said car deliveries for its namesake brand were up 5.3 percent in March and flat for the quarter.
Deliveries for Nissan's second-best selling car, the Sentra compact, rose 2 percent in March and the Altima sedan dropped just 1.9 percent, both improving from weak performances in January and February.
"The segment is fairly stable for sedans, though they're still not where they were a few years ago," Billy Hays, the head of Nissan brand sales in the U.S., said in a phone interview.
Toyota's Camry and Corolla deliveries continued to drop in March, but its executives think the worst may be over when it comes to the shift from cars to crossovers and light trucks.
"The pace of the change has decreased," Jack Hollis, the Toyota brand sales chief in the U.S., told reporters on a conference call. "We're very close to a bottom."
Information for this article was contributed by Martin Crutsinger of The Associated Press and by Gabrielle Coppola, Chester Dawson, David Welch and Melinda Grenier of Bloomberg News.
Business on 04/03/2019