Headline U.S. durable goods orders blew away expectations in March, jumping 4.0% in the month, the largest gain since last July. All of the gain, however, was from aircraft………non-defense aircraft and parts were up 30.6%.Excluding transportation, durable goods orders slipped 0.2%, as fewer orders for machinery, communications, electrical/appliances, and metals, swamped gains in orders in the auto sector, and computers and the like. Most importantly, core orders (or orders for nondefense capital goods excluding aircraft), a proxy for future capital spending, declined 0.5%, extending its losing streak to seven consecutive months, previously only seen once in 2012 (data began in 1992).“I could point out the volatile nature in this report, and all of the temporary factors that could be restraining business capital spending (ports disruption comes to mind), but the trend over the past few months has been pretty clear. The strong dollar, weaker demand from global customers (in part, stemming from the greenback’s strength), perhaps a hesitancy to spend until more obvious signs of a rebound are in the works…..are factors that are holding back stronger capex. And that, in turn, will hold back stronger economic growth.” – notes Jennifer Lee from BMO Capital Markets
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