Preview: Due April 29 - U.S. March Durable Goods Orders - A moderate rise, upside risk in defense
We expect March durable goods orders to increase by 1.0% overall, with a 0.4% increase ex transport, with most of the transport increase coming in defense. Ex transport trend will remain positive, but a 0.4% increase would be slightly below recent trend. We expect a 0.5% increase ex defense.
There are upside risks in defense after two straight declines and the outbreak of war in the Middle East. Transport has a large overlap with defense. Boeing data suggests only a marginal rise in civil aircraft, often a source of volatility while autos are at risk of a correction from a strong February gain.
Ex transport orders have seen ten straight gains with the six month average increase being 0.6%. With ISM manufacturing new orders losing a little momentum in March we expect February’s above trend 0.9% increase ex transport increase to be followed by a slightly below trend gain of 0.4%.
We expect non-defense capital orders ex aircraft, a key indicator of business investment, to increase by 0.5%, after a 0.7% increase in February. While February’s gain underperformed that seen ex transport the latter series tends to be less volatile. Both series have a six month average of 0.6%.
