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Durable Goods: Surprise Bounce For Boeing, Trend Still Concerning

April 25, 2019

Bottom Line: Durable goods orders rose sharply more than expected in March as aircraft orders swung sharply with Boeing reporting a surprising 44 orders (vs. just 5 in February), despite the grounding of their 737 Max. Excluding transportation orders the March tally also saw a modest rebound, but the trend looks less impressive with the 3-month annul rate of change just 0.5%, sharply below the six- and 12-month averages, 1.2% and 2.9%, respectively. Nonetheless, while the trend still looks to be decelerating, nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, were modestly above their Q4 level, suggesting that capital spending will likely make a positive contribution to Q1 GDP growth (due tomorrow).

Durable Goods Orders ROSE by 2.7% in March, compared with market expectations for a decline of 1.8%. Moreover, the prior month was revised higher from -1.6%to -1.1%.

Transportation Orders ROSE by 7.0% with civilian aircraft orders climbing by 31.2% while motor vehicle orders climbed by 2.1%. Ex-transportation orders ROSE by 0.4%.

Core Durable Goods Orders, those excluding both civilian aircraft and defense, ROSE by 0.87% and are 4.6% ABOVE their year ago level.

Nondefense Capital Goods Shipments ROSE. Including civilian aircraft, they ROSE by 0.0% and excluding them they FELL by 0.2%

Durable manufacturing inventories ROSE by 0.3%.

Nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, are modestly above their Q4 level, suggesting that capital spending will likely make a positive contribution to Q1 GDP growth.

Article by Contingent Macro Advisors