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The Census Bureau reports Factory Orders rose 1.2% in February, well under the Econoday consensus estimate for factory orders was 1.7%

Revisions took January from -1.4% to -1.3%. Excluding transportation, orders rose only 0.1%.

Econoday sees it this way.

The book on February's factory sector, the month before tariffs on metals hit, is now closed. Orders rose 1.2 percent but benefited from a jump in aircraft which, in January, skewed orders sharply lower. Excluding aircraft as well as other transportation equipment, orders managed only a 0.1 percent increase vs January's 0.4 percent rise.

Yet there is definitive strength in the February report as orders for core capital goods (nondefense ex-aircraft) surged 1.4 percent with shipments for this reading also up 1.4 percent. The latter is a direct input into GDP and will help the first-quarter showing for business investment.

Primary metals, where U.S. tariffs are targeted, were already in demand in February, rising 2.8 percent with related inventories already building at 0.5 percent. This will be a subcomponent to watch as tariff effects unfold and whether manufacturers are pre-buying metals in anticipation of higher prices ahead.

Other readings include another surprisingly modest build for unfilled orders, up only 0.2 percent following January's 0.3 percent decline. Total inventories rose a moderate 0.3 percent in the month with total shipments up 0.2 percent.

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Despite some soft readings in this report, the overall order rise and especially the order rise for capital goods point to manufacturing momentum.

Big Yawn

I see no value in tariffs, and I question a build-up of auto parts, up a sizable 1.5%. Transportation was up 6.6% in December, down 9.8% in January, and up 7.0% in February.

The report is mostly a mixed bag, and it's easy to make whatever case you want. The bond market reacted with a big yawn, which is about how I see things.

Mike "Mish" Shedlock