Durable Goods Orders: Gains, Modest Boost to 1Q GDP Due Tomorrow

Bottom Line: Durable goods orders rose less than expected in March but were revised higher for February. . Looking at the past 12 months, hardgood orders have increased at a 4.5% annualized rate. Nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, are moderately above their Q4 level, suggesting that capital spending will likely make a modest positive contribution to Q1 GDP due tomorrow (consensus = 1.0%). Durable Goods Orders ROSE by 0.7% in March, compared with market expectations for an increase of 1.3%. Moreover, the prior month was revised higher from 1.7%to 2.3%. Transportation Orders ROSE by 2.4% with civilian aircraft orders climbing by 7.0% while motor vehicle orders fell by 0.8%. Ex-transportation orders FELL by 0.2%. Core Durable Goods Orders, those excluding both civilian aircraft and defense, FELL by 0.4% and are 3.8% ABOVE their year ago level. Nondefense Capital Goods Shipments ROSE. Including civilian aircraft, they ROSE by 1.3% and excluding them they ROSE by 0.4% Durable manufacturing inventories ROSE by 0.1%. Nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, are moderately above their Q4 level, suggesting that capital spending will likely make a small positive contribution to Q1 GDP growth.