Durable Goods Disappointing

This morning the Census Bureau released the latest, and revised, durable goods data for April. While the headline was up it fell short of consensus expectations for a 0.5 percent increase — it was the core orders that unexpectedly declined. Headline durable goods, including the volatile transportation segment, made a slight 0.2 percent comeback in April, following a 3.7 percent plunge in March (the prior revised estimate was down 3.9 percent).

However, excluding transportation, durables declined 0.6 percent after a revised 0.8 percent drop in March (prior revised estimate was down 1.3 percent). The April decrease was much greater than the consensus expectations of a 0.7 percent rise.

The transportation component posted a 3.1 percent increase in April following a 2.3 percent rise in March. Strength was found in non-defense aircraft, up 7.2 percent, and motor vehicles, up 5.6 percent. Defense aircraft dropped a whopping 34.0 percent.

Apart from transportation weakness was widespread with declines in machinery and fabricated metals, computers & electronics and in electrical. The outlook for near-term business investment in equipment has softened over the last two months and new orders for non-defense capital goods excluding aircraft declined 1.9 percent in April and dipped 2.2 percent in March with shipments easing 1.4 percent for the month.

This data confirms the recent analysis that we have done showing that forward economic expectations are on the decline as the internals of the current economy continues to soften.

One thing of particular ...