US durable goods orders fall sharply

The volatility in US durable goods orders continued in March. Durable goods orders plunged by 4.2% M/M in March, while the consensus was looking for a more moderate decline (by 1.7% M/M). The previous figure was downwardly revised from 2.2% M/M to 1.9% M/M. The details show that orders for transportation dropped by 12.5% M/M due to weakness in nondefense aircraft (-47.6% M/M), while orders for vehicles and parts rose by 0.1% M/M. Durables excluding transportation fell by 1.1% M/M, while an increase by 0.5% M/M was expected. Weakness was based in orders for: machinery (-2.6% M/M), primary metals (-1.8% M/M), computers and electronics (-1.8% M/M) and fabricated metals(-1.6% M/M). Only orders for electrical equipment rose by 3.2% M/M. The only bright spot in the report, but an important one, was shipments of non-defence capital goods less aircraft, which rose by 2.6% M/M after already a 1.4% M/M increase in February. This is an important proxy for non-residential investments and lifts therefore a bid the expectations for first quarter GDP, which will be published tomorrow. Apart from this factor however it is a disappointing report with durable orders falling at the fastest pace in more than three years, adding to the signs that the momentum in the US manufacturing sector is slowing somewhat.