Reem Nasr

Orders for long-lasting manufactured goods rebounded in February, although the transportation sector made most of those gains. An unexpected drop in spending on capital goods, like machinery and tools, has stirred worry over a sluggish first quarter.

Durable goods orders increased by 2.2 percent last month, the Commerce Department said Thursday. That jump follows two consecutive monthly decreases, including a revised 1.3 percent fall in January. But most of the growth happened within the transportation and defense sectors. Excluding transportation, new orders increased a mere 0.2 percent.

“There’s been virtually no growth in the first couple of months this year and it’s clear that the general economy is going to slow down compared to last quarter,” said Dan Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation.

Orders for defense and aircraft have long lead times and occur irregularly, which often does not make them the best gauge of economic activity. Transportation equipment jumped 6.9 percent from January. That was lead by nondefense aircraft and parts. Boeing reported 74 orders for planes last month, as opposed to just 38 aircraft in January.

But economists recognize the volatility of transportation in the monthly data report. That’s why they use the gauge of nondefense orders for capital goods to measure business spending plans. Those orders actually decreased by 2.8 percent in February and follow two consecutive months of decreases.

“I was disappointed,” adds Meckstroth.

Durable goods like refrigerators and computers are meant to last three years or longer and are pricy. So economists use them as an indicator for how comfortable consumers are feeling.

Michelle Smith is an office manager at High-End Appliance, a service provider of Sub-Zero refrigerators and Wolf appliances in New York City. She says the repair business has been unusually good this winter.

“This winter we happened to be busier than last year,” said Smith. “That probably means that many people are choosing to fix their appliances rather than go out and buy new ones.”

She added that many New Yorkers were forced to go out and buy new large ticket appliances after they were flooded out by Hurricane Sandy in 2012.

“So that was a large wave of appliance purchases that we probably won’t see until the economy picks up. For now it’s going to be a lot of people just repairing what they already own.”

But some economists see the current slowdown as result of high expectations going out of 2013. In addition to rough weather earlier this year that impacted manufacturing, jobs and housing, inventory build up has led to slowing production rates.

“Expectations in the second half of 2013 were high,” said Tim Gill, chief economist at the Association of Electrical Equipment and Medical Imaging Manufacturers.

“We are now seeing an adjustment in production and hopefully see a more sustainable rate for the rest of the year.”

Gill expects the rest of the year to be a good one for manufacturing despite the slow start. With consumer spending expected to pick up and the start of warmer weather, 2014 will be stronger than what many say was a good 2013.

“We can expect better than last year for overall output growth for manufacturing,” said Gill.

Meckstroth concurs, despite last month’s weak capital goods numbers.

“There will be a pick up in the summer and I’m expecting a 3.3 percent increase this year as opposed to last year’s 2.3 percent increase in production.”

Most economists can agree that the durable goods report is one of the most erratic; it mirrors the economy’s irregular pattern of growth which alternates between periods of acceleration and deceleration.