Durable Goods, April 2014
Following a long holiday weekend equity futures remain higher following a headline beat for durable goods data, which was further boosted by upward revision to the prior reading. Orders for longer-lasting durable goods were expected to soften by 0.7% following the earlier March rebound. However, orders were surprisingly stronger gaining by 0.8% with gains coming from computers and fabricated metals. Outside of those areas, however, orders were a little slack, falling for the most part. Indeed, the ex-transportation measure rose by 0.1% and only slightly better than the consensus forecast of unchanged.
Rising business demand for computers is nevertheless a good sign, flowing straight through to capital goods orders, which fell by 1.2% in April. However, that represents a pullback from an upwardly revised gain in March of 4.9%, which was the largest monthly increase since November. Shipments of capital goods started the quarter on a worse than expected note, falling by 0.4% and two-times the forecast dip. This measure flows through to the GDP calculation although with the headline reading showing signs of resilience as manufacturing remains buoyant, there seems little to be overly concerned about.
Chart – Durable and capital goods orders