U.S. Durable Goods Orders (FEB) (13:30 GMT, 8:30 EST)
Consensus:  1.3%
Previous: -9.9%

Consensus: U.S. durable goods orders are likely to expand by 1.3% in February as business fixed investment is expected to trend higher.  Excluding transportation equipment, which exhibited its intense volatility last month, orders for durables are predicted to increase by 1.0%.  U.S. companies continue to improve productivity, driving profits consistently higher.  This has left many manufacturers with superfluous funds to invest in new equipment.  As a result, spending on capital equipment is anticipated to grow by 17% in the first quarter.  According to a survey conducted in February, 35% of small business owners have intentions of purchasing new equipment in coming months.  This will give the manufacturing sector a boost in spite of production cuts anticipated in some industries-namely the automobile business.  With consumer consumption and housing activity taking a downturn, capital investment may provide manufacturing the activity it needs to sustain strong growth in the first quarter.   

Previous: Orders for items made to last several years plummeted a striking 9.9% in January.  The massive decline, however, painted a misleading picture of the U.S. manufacturing sector.  Excluding transportation equipment, durable goods orders actually increased 0.6% on the month.  An enormous drop-off in aircraft orders from Boeing Co. was responsible for the seemingly radical decline in durables orders.  One month earlier, the aircraft manufacturer reported 204 new orders-the highest in 2005.  In contrast, new orders in January totaled a mere 39 pieces.  This represented an 81% decrease in new business over the month, which is the largest decline the company has seen in 8 years.  Removing Boeing and transportation companies in general from the manufacturing scene revealed relatively strong industrial health. Capacity utilization hit 80.5% in January-the highest in five-and-a-half years.  As U.S. manufacturers push up against their productivity constraints to meet high demand for durable goods, inflationary pressure will become an issue of even greater concern.

Richard Lee is a Currency Strategist at FXCM.