21 January 2019

Weaker Than Expected US Orders and Shipments

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Durable goods orders fell 5.7% month over month in March, below the consensus (-3.0%). As anticipated, the decline was centered in the volatile components, particularly defense (-33.2%) and non-defense aircraft (-48.2%). Although the core capital goods orders were up 0.2% this number was softer than was expected (0.5%) and was accompanied by a downward revision to February, to -4.8% from -2.7%. In the first quarter as a whole, core orders were up a solid 16.7% quarter over quarter at an annualized rate, although this represents a modest slowdown relative to the 20.4% gain in Q4 (Figure 1). A similar picture was evident in core shipments, with a softer-than-expected, 0.3% month over month, gain in March, a downward revision to February (to 1.2% from 1.9%) and a deceleration in the first quarter of 2013. This is consistent with market view that real equipment and software investment will provide less of a boost to GDP growth in Q1 than in Q4.Based upon trends it would not be surprising to see a modest downside risk to the forecasted 3.0%.  

Figure 1: Core orders and shipments 


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