Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work. That’s why KPMG LLP established its industry-driven structure. In fact, KPMG LLP was the first of the Big Four firms to organize itself along the same industry lines as clients.

How We Work

We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

Learn more

Careers & Culture

What is culture? Culture is how we do things around here. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done.

Learn more

Business investment and plans soften

Durable goods orders contracted from January to February.

Durable goods orders contracted by a larger-than-expected 1% in February, missing expectations for a small gain of 0.2%. January orders were revised lower to show a larger drop of 5% versus the originally reported -4.5%. 

A notable pullback in transportation orders, down 2.8%, contributed to the weakness in February. Non-defense aircraft orders fell 6.6% as Boeing snagged just 5 plane orders versus 55 units in January. Motor vehicles and parts orders declined 0.9% after being flat in January. The motor vehicle industry continues to face difficulty in maintaining production schedules due to labor shortages.

Defense orders fell 7.4% in February, which follows strong gains in the recent months. We expect defense spending will rebound, given the continuation of the war between Russia and Ukraine. Other industries showing declines in February included machinery, -0.5%, and computer and electronics orders, -0.1%.

Last month, underlying data such as capital spending and factory investment in the current quarter had shown strength, suggesting a better outlook at the start of the year. However, the latest data for February revealed muted outcomes, clipping that optimism. This is an area of softness that Federal Reserve Chairman Jay Powell noted in his press conference following the Federal Open Market Committee earlier this week.

Core shipments, an input into current GDP calculations via the nonresidential fixed investment component, were unchanged in February. This is a notable stepdown in momentum from a downwardly revised +0.9% in January. 

Nondefense capital goods orders excluding aircraft, a proxy for business investment, rose 0.2% in February after rising a revised 0.3% in January. It was originally up +0.8%. The latest gains fall at the bottom of the range of increases over the last year and are expected to move lower, given the current tightening of credit conditions, especially across middle-market manufacturers.

As stakes are being put into the ground from the Inflation Reduction Act, particularly to those sectors tied to electric vehicles, electrical equipment orders rose 1% in February after a robust gain of 2.1% in January. The three-month annualized change for those orders rose 16.5% in February. Those gains and the ramp-up of infrastructure spending associated with the 2021 stimulus package are blunting weakness elsewhere.

One signal that casts a pall over the near-term momentum of the overall factory sector is the ongoing weakness reflected in manufacturing surveys. The S&P Global Purchasing Managers Index (PMI) for manufacturing new orders was reported at 48.8 for March, the sixth straight month of a below-50 result, signifying contracting activity.  


Bottom Line

The factory orders data, along with the March PMI, indicate a manufacturing sector that is losing momentum.  Given the expected tightening in credit conditions for businesses, also noted by Powell, the emerging weakness is likely to accelerate in the second quarter of 2023.

The emerging weakness in the first quarter is likely to accelerate into the second quarter.

Explore more

Meet our team

Image of Kenneth Kim
Kenneth Kim
Senior Economist, KPMG US

Subscribe to insights from KPMG Economics

KPMG Economics distributes a wide selection of insight and analysis to help businesses make informed decisions.

Thank you

Thank you for subscribing. You should receive a confirmation e-mail soon.

Subscribe to insights from KPMG Economics

Now more than ever, companies are using data to make informed decisions about the future of their business. KPMG Economics is continuously monitoring and analyzing economic and geopolitical data so we can provide business leaders with reliable and timely insight and analysis.

To receive our Economic Updates and other relevant content published by the KPMG Economics as soon as it is released, please provide the following details:

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Thank you!

Thank you for contacting KPMG. We will respond to you as soon as possible.

Contact KPMG

Use this form to submit general inquiries to KPMG. We will respond to you as soon as possible.

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Job seekers

Visit our careers section or search our jobs database.

Submit RFP

Use the RFP submission form to detail the services KPMG can help assist you with.

Office locations

International hotline

You can confidentially report concerns to the KPMG International hotline

Press contacts

Do you need to speak with our Press Office? Here's how to get in touch.