US Durable Goods Data Indicates Increased Business Spending

US Durable Goods Data Indicates Increased Business Spending

US Durable Goods Data Indicates Increased Business Spending


New orders for Key US-made capital goods rose less than expected in March, but a 2nd straight monthly increase in shipments suggested business investment accelerated in Q-1 behind a recovering energy sector.

While other data relieved Thursday showed a bigger-than-expected increase in 1st-time applications for unemployment benefits last week, the trend remained consistent with tightening labor market conditions.

The US Commerce Department said non-defense capital goods orders ex-aircraft, a closely watched proxy for business spending plans, increased 0.2% last month after gaining 0.1% in February.

Shipments of these core capital goods rose 0.4% after jumping 1.1% in February. Core capital goods shipments are used to calculate equipment spending in the government’s GDP (gross domestic product) measurement.

March’s modest increase suggests a loss of momentum in the manufacturing sector after recent strong growth.

Manufacturing, which accounts for about 12% of the US economy, is being underpinned by the energy sector revival.

Business spending on equipment is expected to have accelerated from Q-4 annualized 1.9% growth pace.

The US economy turned in the weakest performance in 3 years in Q-1 as consumers sharply slowed their spending.

GDP, the total output of goods and services, grew by just 0.7% in Q-1 following a gain of 2.1% in Q-4, the US Commerce Department reported Friday.

The slowdown primarily reflected slower consumer spending, which grew by just 0.3% after a 3.5% gainer in the prior Quarter. It was the poorest showing in more than & years. Analysts blame in part the unusually warm Winter, which meant less spending on utility bills.

Economists believe the slowdown will be temporary. They forecast GDP growth will rebound to 3% or better in the current Quarter.

Friday, the US major stock market indexes finished at: DJIA -40.82 at 20940.51, NAS Comp-1.33 at 6047.59, S&P 500 -4.57at 2384.20

Volume: Trade on the NYSE came in heavy with 1.33-B/shares exchanged.

  • NAS Comp +12.3% YTD
  • S&P 500 +6.5% YTD
  • DJIA +6.0% YTD
  • Russell 2000 +3.2% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Neutral (0.20) Neutral (0.23) Bullish (0.27) Neutral (0.10)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.23) Neutral (0.12) Bullish (0.31) Bullish (0.25)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.21) Bullish (0.46) Bullish (0.25)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.26) Neutral (-0.10) Bearish (-0.35) Bearish (-0.33)

Have a terrific weekend,

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