Durable Goods Orders: New Orders Increase Modestly

Bottom Line: Durable goods orders rose in March, less than expectations. Although they have climbed at a 7.7% annualized rate in the last three months, this reflects sharp swings in aircraft orders. Looking at the past 12 months, hardgood orders have declined at a 2.5% annualized rate. Nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, are moderately below their Q4 level, suggesting that capital spending will likely make a small negative contribution to Q1 GDP growth. Durable Goods Orders ROSE by 0.8% in March, compared with market expectations for an increase of 1.9%. Moreover, the prior month was revised slightly lower from -3.0%to -3.1%. Despite the increase, hardgood orders are now 2.5% BELOW their year ago level. On a year-over-year basis, durable goods orders have been on a declining trend over the past year, amid substantial volatility. Transportation Orders ROSE by 2.9% with civilian aircraft orders dropping by 5.7% while motor vehicle orders fell by 3.0%. Defense aircraft's rose by 65.7%. Ex-transportation orders FELL by 0.2%. Electrical equipment, fabricated metal products, computers and electronic products declined while primary metals, all other durable goods and machinery increased Core Durable Goods Orders, those excluding both civilian aircraft and defense, FELL by 0.7% and are 0.2% BELOW their year ago level. Core durable goods orders growth has been slowing since April 2010. Nondefense Capital Goods Shipments ROSE. Including civilian aircraft, they ROSE by 0.3% and excluding them they ROSE by 0.3% Durable manufacturing inventories were UNCHANGED.