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    US Durable Good Orders Fall, Capital Spending Gains

     

    Business spending and most durable goods orders rose for the second consecutive month, indicating the firms may be anticipating a better second half of the year and that consumers may be ready to deliver it.

    New orders for capital goods outside of defense procurement and aviation, an index that is used as a proxy for business capital investment, climbed 1.0 % in April, after March’s substantial upward revision to 1.5 % from -0.5%, reported the Commerce Department in Washington today.

    Following the negative reading in January and February, it is a signal that business are willing to spend, at least tentatively, in anticipation of improving sales later in the year. A 0.3 % gain had been forecast by analysts. Orders in this category slipped 0.6 percent on the year, the fourth decline in a row but the smallest of the run. 

    Durable goods orders excluding the transportation sector, a category which covers most consumer goods, rose 0.5%, also the second improvement in a row.  The prior month was revised markedly higher to 0.6 % from -0.2%. Economists had predicted a 0.3 percent increase. Orders outside of defense increased 0.2 percent.

    Overall durable goods orders dropped 0.5% as forecast and were 2.1 percent lower on the year.

    Shipments for non-defense capital goods excluding aircraft, that is deliveries of the above business spending proxy,  which is used in calculating gross domestic product, gained 0.8 percent in April, after increasing 1 percent in March and the first back to back gains since July and August last summer. 

    In a separate report sales of new homes rose 6.8 percent to a 517,000 annualized rates form 484.000 the months before according to the Commerce Department. The median forecast predicted a 504,000 sales pace. The median sales price increased to 297, 300 from 285,500, and was 8.3 percent higher on the year. 

    The Atlanta Federal Reserve’s GDPNow estimate of second quarter GDP, which was the most accurate forecast for the first three months of the year, added 0.1%, based on today’s statistics to 0.8% at an annual rate.

    Joseph Trevisani

    Chief Market Strategist

    WorldWideMarkets Online Trading

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