US Durable Goods Orders: Hard to make sense of the data – BMO

Underlying new orders and shipments for US factories were much better than expected in March, suggesting some upside risk for Q1 and even Q2 investment and GDP, Sal Guatieri from the Royal bank of Montreal reports.

Key quotes

“US Durable Goods Orders fell 14.4% in March, somewhat worse than expected, largely due to big declines in aircraft and autos.” 

“Excluding transportation, orders were down just 0.2% while Core Capital Goods Orders (ex-aircraft and defense) were actually up 0.1%, contrasting with expectations of a big tumble.” 

“On the shipments side, Core (ex-aircraft) Sales of Capital Goods rose 1.9% (after climbing 1.3% in February). This feeds into the BEA's estimate of Q1 business investment and GDP, suggesting upside risk. To boot, inventories bounced 0.6% in the month.”