USD: US Core Capital Goods Orders Show Moderate Rise in March
US Durable Goods orders reading came at 2.6% in the March month from 0.70% in the Previous month. This is Good improvement in the Business spending plan for Durable Goods. This reading will be helpful for US GDP data in the First quarter. US Dollar rebounded from lows after the data reading printed.
USD Index Market Price is moving in box pattern and market has reached support area of the pattern
In March, new orders for crucial U.S.-manufactured capital goods showed a moderate increase, while data for the previous month was revised downward, indicating a sluggish pace of business spending on equipment in the first quarter. According to the Commerce Department’s Census Bureau, orders for non-defense capital goods excluding aircraft, a significant indicator of business spending intentions, rose by 0.2% last month. However, February’s figures were revised lower, with core capital goods orders increasing by 0.4% instead of the previously reported 0.7%. Economists surveyed by Reuters had anticipated a 0.2% gain in core capital goods orders.
Business investment in equipment has faced challenges following a series of 525 basis points interest rate hikes by the Federal Reserve since March 2022 to address inflation concerns. While the central bank is expected to begin lowering rates this year, the timing of the first rate cut remains uncertain as inflation remains elevated amid a resilient economy.
Core capital goods shipments rebounded by 0.2% after declining by 0.6% in February. Although non-defense capital goods orders surged by 5.4%, shipments of these goods fell by 1.5% after a 2.4% increase in February. Shipments of these goods contribute to the calculation of the business spending on equipment component in the gross domestic product (GDP) report, which is set to be released on Thursday.
Economists surveyed by Reuters estimate that GDP expanded at a 2.4% annualized rate in the last quarter. This follows a 3.4% growth pace in the October-December quarter. Business spending on equipment is projected to have shown a mild increase after contracting for two consecutive quarters. However, the manufacturing sector, which represents 10.4% of the economy, is showing signs of improvement. Orders for durable goods, which include items expected to last three years or more, surged by 2.6% in March following a downwardly revised 0.7% increase in February.
USD: Durable Goods Orders Beat; Core Orders Fall Short
US Durable Goods orders reading came at 2.6% in the March month from 0.70% in the Previous month. This is Good improvement in the Business spending plan for Durable Goods. This reading will be helpful for US GDP data in the First quarter. US Dollar rebounded from lows after the data reading printed.
USD Index Market Price is moving in Ascending channel and market has rebounded from the higher low area of the channel
The U.S. Census Bureau recently unveiled its Monthly Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders for March, revealing a substantial uptick in new orders, indicating ongoing strength in demand for manufactured durable goods.
New Orders Surge:
In March, new orders for manufactured durable goods surged by $7.3 billion or 2.6%, reaching a total of $283.4 billion. This follows a 0.7% increase in February, highlighting a buoyant consumer and business spending environment. Excluding transportation, new orders saw a more modest uptick of 0.2%, while orders excluding defense recorded a robust 2.3% increase.
Transportation Equipment Leads:
The standout performer this month was the transportation equipment sector, which soared by $6.8 billion or 7.7% to $95.9 billion. This significant contribution underscores the sector’s pivotal role in propelling the durable goods market forward. The consecutive two-month growth in transportation equipment highlights a sector that is not only recovering but also expanding.
Comparison with Estimates:
The actual increase in durable goods orders outpaced pre-report estimates, which had projected a 2.5% rise in durable goods orders and a 0.3% increase in core durable goods. These figures reflect a stronger level of economic activity than initially anticipated, signaling underlying economic resilience.
Market Forecast:
With consistent growth in new orders, particularly in the transportation sector, and the surpassing of pre-report estimates, the short-term outlook for the durable goods market appears bullish. Investors and traders can anticipate sustained expansion driven by robust demand and economic confidence.
Impact on Market Sentiment:
This robust data point is likely to influence market sentiments positively and inform investment decisions favorably in the coming months, indicating a positive trend for the manufacturing sector.
USD: US Core Capital Goods Orders Inch Up in March
US Durable Goods orders reading came at 2.6% in the March month from 0.70% in the Previous month. This is Good improvement in the Business spending plan for Durable Goods. This reading will be helpful for US GDP data in the First quarter. US Dollar rebounded from lows after the data reading printed.
USD Index Market Price is moving in Ascending channel and market has reached higher low area of the channel
In March, new orders for essential U.S.-manufactured capital goods experienced a moderate increase, with the Commerce Department reporting on Wednesday. This data, alongside revised figures from the previous month, suggests that business investment in equipment likely remained subdued throughout the first quarter of the year.
The report precedes the anticipated release of the government’s initial estimate of gross domestic product (GDP) for the January-March quarter on Thursday. Analysts anticipate another robust quarter of economic performance, supported by a resilient labor market fueling consumer spending.
According to Conrad DeQuadros, a senior economic advisor at Brean Capital, the data’s impact on first-quarter GDP estimates should be minimal. He notes that while the report suggests manufacturing weakness isn’t intensifying, there are also no clear signs of recovery.
Specifically, non-defense capital goods orders excluding aircraft, a significant indicator of business spending intentions, increased by 0.2% last month, as reported by the Commerce Department’s Census Bureau. February’s data was revised downward, indicating a 0.4% rise in core capital goods orders, compared to the previously reported 0.7%.
March’s uptick aligns with economists’ expectations, showing a 0.6% year-on-year increase in core capital goods orders.
Business investment in equipment has faced challenges following the Federal Reserve’s series of interest rate hikes since March 2022 to combat inflation. Although the Fed is expected to commence rate reductions this year, the timing remains uncertain amid persistent inflationary pressures and economic resilience. Since July, the Fed has maintained its policy rate within the 5.25%-5.50% range.
Regarding shipments, core capital goods rebounded by 0.2% after a 0.6% decline in February. However, when adjusted for inflation, these shipments likely remained unchanged. Non-defense capital goods orders surged by 5.4% following a 2.7% increase in February. Conversely, shipments of these goods declined by 1.5% after a downwardly revised 2.4% rise in February.
Economists estimate a 2.4% annualized GDP growth rate for the first quarter, compared to the 3.4% pace recorded in the October-December quarter. Business investment in equipment is expected to contract for the third consecutive quarter.
However, there are signs of stabilization in manufacturing, which accounts for 10.4% of the economy. Orders for durable goods increased by 2.6% in March, following a downwardly revised 0.7% rise in February.
USD Index Market Price is moving in box pattern and market has reached resistance area of the pattern
Transportation drove much of the order increase in March, particularly civilian aircraft orders, which surged by 30.6%. Orders for motor vehicles and parts also rose by 2.1%.
Orders for computers and electronic products increased by 0.8%, while those for electrical equipment, appliances, and components saw a modest 0.1% gain. Machinery orders edged up by 0.1%.
Orders for fabricated metals rose by 0.2%, while primary metals experienced a 0.5% decline.
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