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Durable Goods Orders: Improvement, But Still Not Like Survey Data

March 24, 2017
Bottom Line: Durable goods orders rose in February and have climbed at a 13.2% annualized rate in the last three months. Looking at the past 12 months, hardgood orders have increased at a 5.0% annualized rate. The January and February average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is modestly above its Q4 level, suggesting that capital spending will have a positive Q1 impact on GDP growth.

After 4 months of better survey data, hard data, such as this report, are improving only modestly. While still early and there is improvement, so far the strong surge in business surveys are not resulting in as strong a pickup in actual activity.

Durable Goods Orders ROSE by 1.7% in February, compared with market expectations for an increase of 1.4%. Moreover, the prior month was revised higher from 1.8%to 2.3%.

Transportation Orders ROSE by 4.3% with civilian aircraft orders climbing by 47.6% while motor vehicle orders fell by 0.8%. Ex-transportation orders ROSE by 0.4%.

Core Durable Goods Orders, those excluding both civilian aircraft and defense, ROSE by 0.3% and are 3.4% ABOVE their year ago level.

Nondefense Capital Goods Shipments FELL. Including civilian aircraft, they FELL by 0.1% and excluding them they ROSE by 1.0%

Durable manufacturing inventories ROSE by 0.2%.

The January and February average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is modestly above its Q4 level, suggesting that capital spending will have a positive Q1 impact on GDP growth.