US Durable Goods Data Indicates Increased Business Spending

US Durable Goods Data Indicates Increased Business Spending

US Durable Goods Data Indicates Increased Business Spending

$DIA,  $SPY, $QQQ, $VXX

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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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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