This article discusses the state of the durable goods industry in the current economic scenario.
Besides crude oil prices falling down, there are other industries that are showing signs of slowing down as well. Take for instance the manufactured goods industry, especially in the durable goods segment. The factory orders fell in the month of February in US. This is a reflection of other developed economies as well. The drop has been largest since December prices in this category. The percentage of fall was 2.8 percent in February though there had been an increase in prices, by about 4.2 percent in the month of January. Commercial aircrafts are also part of this industry and the demand fell by 27.1 percent in February.
Commercial aircraft segment
In the commercial aircraft sector the orders are largest from Boeing and that also registered a drop. Demand has fallen for military aircraft as well. There had been a surge by about 97 percent in the month of January but the demand for parts has fallen by 29.2 percent in the month of February. For industry experts it signifies that durable goods sector remains under pressure or has declined in demand side. Capital markets experts state that the drops that are being seen in business investments, including capital investments will lead to a drag on the economic growth in the first quarter of the new financial year. The current forecast is 2.3 percent of growth for the next quarter, but that also depends on the market performance seen in March.
2015 has been a tough year for manufacturing and the prospects do not look certain for the upcoming financial year of 2016. The export markets are weak as well as the dollar continues to strengthen which does not spell well for the durable goods industry. Besides aircraft nonmilitary goods fell by 1.8 percent after there was a rise of about 3 percent in the month of January. Energy industry falls in this segment that has been affected by falling crude prices, which has led to demand setbacks and job cuts as well. Machinery orders have fallen around 2.6 percent. That includes electrical equipments and appliances. The drop has been around 2.8 percent. Demand for computers did rise by about one percent, though communication equipments have fallen by about 2.3 percent.
As the industry has been slowing down, declining or seeing spurts in growth, unemployment has been on the rise. However, job growth has also been noted due to which the levels of unemployment assistance have not risen as yet. The average figures for unemployment benefits remain same but on the higher side. Applications have been low and businesses are holding onto their manpower. The industry is going through a turmoil stage and growth prospects are uncertain at best as seen by industry. By the way, you can can Find Here Stock Market Rally To Get Affected By A Slowing Economy.
With the current performance and forecasts of the industry investors will probably rethink their investments. When a sector slows down, there is not much sense in pumping in funds further in such an economy. That is when redirection of funds takes place.