U.S. equity index futures pared losses as data surprised to the upside, reversing an earlier drop of 8 points leaving them unchanged on its mid-week close. The heavyweight durable goods report offered some mild optimism Thursday and is helping support equities on a day when further unsettling reports out of the Ukraine are prompting geopolitical worries amongst investors. Demand for longer-lasting goods fell less than was anticipated although earlier recorded data was massaged lower. The headline level for orders fell by 1.0% (expected to fall by 1.7%). Stripping out the heavy concentration of volatile transport items saw core orders advance by 1.1%, the most since May. Capital goods orders also rose, important because this signals growing business confidence in the outlook. At the GDP level, shipments declined marginally hinting a weak start for the economy in the first quarter.
The advance in orders beyond transport items was accounted for by the first gain in demand for fabricated metals (+7.3%) marking its first monthly gain since August. This component comprises around 12.5% of the overall durable reading and stands lower on a year-on-year basis by 12.4%. So while its monthly rebound helps provide a girder of support to the overall reading, it is long overdue. Also helping at the headline level is demand for computers and electronics (+4.7%). This category is only marginally smaller than the metals component but demand has risen since one year ago by 0.7%.
Chart – Durables aided by rebound in fabricated metals