US investment – finally some good news – ING Think

Posted: April 26, 2020 at 4:41 am


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Hope in the details!

US durable goods orders plunged 14.4% in March, but the details are much better. Transportation orders took a huge hit (-41% month on month), which is once again attributable to Boeings woes (civilian aircraft orders fell 295.7% MoM!!!). There were just 13 Boeing aircraft orders in March, but they also experienced 295 order cancellations, which are subtracted in the durable goods report the Census Bureau uses net orders in its calculations.

Excluding this component orders fell only 0.2% a fantastic outcome given what has happened to manufacturing surveys. Electrical equipment was up 1.5% and capital goods rose 1.3%.

The Fed is known to follow the non-defence capital goods order ex aircraft component closely given this is typically a good lead indicator for investment in equipment and capex in general. It actually rose! Only 0.1% admittedly, but this is much, much better than the -6.7% consensus expectations and offers hope that our -6% annualised GDP estimate for next weeks 1Q GDP report may be a touch too pessimistic.

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US investment - finally some good news - ING Think

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April 26th, 2020 at 4:41 am

Posted in Investment