U.S. stock index futures pared a gain of 8-points following the release of a disappointing durable goods report. New orders for longer-lasting goods slumped at year-end by 4.3% leaving estimates of a rise wanting. In addition to the soft headline reading, previously recorded data was massaged lower. Stripping out the volatile transports category, new orders for goods meant to last more than three-years fell by 1.6%. Yet that number seems at odds with a jump in order books at Boeing and gives cause for optimism over some revision when the next release is made. Commercial aircraft orders fell by 17.5% according to government data while orders for autos and parts fell by 5.8%.
The headline reading was the sharpest decline in five months while outside of orders for transports the slippage was the most since March. However, in terms of GDP accounting, the shipments measure, which is the plug-in to growth, was down just 0.2%. The three-month annualized rate of shipments at the end of the year was 6.5% and compares to a 2.1% pace at the end of the third quarter, indicative of healthy business investment through the final three months of the year.
Whether or not the report continues to impact nearby sentiment remains to be seen. Investors have suffered a significant bruising over the past several trading sessions and the market is due a bounce – something in play ahead of the numbers. On the negative side, this report does smack of a slowdown in the US economy, a feature missing from other recent data with the exception of a weather-distorted payroll reading. However, the bottom line remains that the US economy appears to have developed a significant head of steam during 2013 in the face of strong fiscal headwinds, which as we know, appear to be abating into 2014.