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26 Apr 2016
US Durable Goods: Another miss - Wells Fargo
The Durable goods orders showed an increase of 0.8% in March but according to analysts from Wells Fargo, the turnaround in the factory sector remains in question and declining core capex shipments indicate another drag from equipment spending in Q1 GDP.
Key Quotes:
“Durable goods orders added to the disappointing string of data to come out of the manufacturing sector in March. While purchasing managers’ indices, including the ISM index, have been pointing to a modest turnaround, industrial production and now durable goods orders have fallen noticeably short of expectations and raise questions over the strength of the anticipated rebound.”
“Our preferred measure of the private business spending environment, nondefense orders excluding aircraft, also came in weaker than expected. After declining 2.7 percent in February, core orders could not muster even a modest rebound and were unchanged in March.”
“We estimate real business spending on equipment to have fallen at a 2.3 percent pace in Q1, which would mark the second straight quarterly decline. The smaller-than expected gain in core shipments today generates some downside risk to that call. That said, with core orders looking slightly stronger and momentum still more favorable late in the quarter, we continue to expect equipment spending to post a modest rebound in the second quarter.”
Key Quotes:
“Durable goods orders added to the disappointing string of data to come out of the manufacturing sector in March. While purchasing managers’ indices, including the ISM index, have been pointing to a modest turnaround, industrial production and now durable goods orders have fallen noticeably short of expectations and raise questions over the strength of the anticipated rebound.”
“Our preferred measure of the private business spending environment, nondefense orders excluding aircraft, also came in weaker than expected. After declining 2.7 percent in February, core orders could not muster even a modest rebound and were unchanged in March.”
“We estimate real business spending on equipment to have fallen at a 2.3 percent pace in Q1, which would mark the second straight quarterly decline. The smaller-than expected gain in core shipments today generates some downside risk to that call. That said, with core orders looking slightly stronger and momentum still more favorable late in the quarter, we continue to expect equipment spending to post a modest rebound in the second quarter.”