Orders for U.S. durable goods came in as expected for February, falling 1.2%.

However, BMO Nesbitt Burns says that revisions make the report appear softer than the headline drop suggests.

January orders were also revised down to a 1.9% gain, from the earlier reported 2.9% advance, with many sectors being marked down. “Orders have not been able to gain traction, as despite some month-to-month volatility, new bookings have been essentially flat since the start of 2002,” Nesbitt says.

New orders excluding transportation fell 2.1%, as an increase in defense orders was offset by weakness in computers and communications equipment. Inventories fell for the 24th time in the past 25 months.

“As the diplomatic situation deteriorated through the month, and as war seemed increasingly likely, businesses appear to have cut back on investment. Nondefense capital goods orders excluding aircraft fell 2.8%, unable to break out of their year-long funk,” Nesbitt notes

“U.S. businesses remain extremely cautious, delaying spending and hiring plans, apparently still waiting for the “all-clear” to sound on the economy,” Nesbitt concludes.