Durable goods orders for March rose 0.7% vs an Econoday consensus of 1.1%. Revisions lifted February gains from1.7% to 2.3%. Once again the good news stops there.
Aircraft lifted durable orders throughout the first quarter and made for a very solid 0.7 percent rise in March. But the story is different when excluding civilian aircraft as the ex-transportation reading fell 0.2 percent which is below Econoday’s low estimate. And core capital goods (nondefense ex-aircraft) are soft, up only 0.2 percent for only half the gain that was expected.
Civilian aircraft orders during March jumped 8.7 percent which comes on top of monthly gains of 75 percent and 188 percent in the prior two months. Aircraft orders did lag last year but this rate of gain is not likely to be sustained. A modest plus in the report comes from shipments of core capital goods (in contrast to orders) which rose 0.4 percent in what will be constructive for the nonresidential investment component of tomorrow’s first-quarter GDP report.
But the gain for capital goods shipments, given the weakness in underlying orders, will only steal from April and second-quarter shipments. Outside of aircraft, the factory sector, held back by weak foreign demand, has not lived up to the enormous acceleration being indicated by a host of regional reports led by the ISM and Philly Fed.
Census Reporting
New Orders
New orders for manufactured durable goods in March increased $1.6 billion or 0.7 percent to $238.7 billion, the U.S. Census Bureau announced today. This increase, up three consecutive months, followed a 2.3 percent February increase. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders increased 0.1 percent. Transportation equipment, also up three consecutive months, drove the increase, $2.0 billion or 2.4 percent to $83.3 billion.
Shipments
Shipments of manufactured durable goods in March, up four of the last five months, increased $0.6 billion or 0.2 percent to $239.8 billion. This followed a 0.2 percent February increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $0.4 billion or 0.5 percent to $81.7 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in March, up two consecutive months, increased $2.5 billion or 0.2 percent to $1,119.0 billion. This followed a 0.1 percent February increase. Transportation equipment, also up two consecutive months, led the increase, $1.6 billion or 0.2 percent to $755.5 billion.
The above numbers from the Census Department Advance Monthly Report on Inventories and New Orders.
GDP Estimates
Shipments feed into GDP. These numbers, especially automotive, look terrible. The rest of today’s economic reports are less than stellar as well.
I am going to take 0.3 percentage points off my first quarter GDP estimate for tomorrow. This has me back at 0.4% for the quarter.
Housing and aircraft are the only two things that are humming right now. The economy won’t grow on that for long.
Mike “Mish” Shedlock
