Apr Durable goods mixed but Mar revised up sharply

Durable Goods orders rose by 2.9%, more than twice expectations and Mar was revised higher but it was all aircraft orders as ex transports, orders fell by 1% vs an expected rise of .5%. But, Mar ex transports were revised up by 2 % pts, thus taking the two months together has the data above expectations. New order drops in electrical equipment, machinery and primary metals just partially reversed the gains in Mar. Non defense capital goods ex aircraft fell by 2.4% after strong gains in the prior two months but is up 23.5% y/o/y. Shipments, which follow orders and get directly plugged into GDP, rose by 1.4%. While inventories rose by .7%, the inventory to shipments ratio fell to 1.54 months from 1.55. Bottom line, the data has always been volatile as evidenced by the sharp revisions to March but is still good overall. The real test remains though what impact China and Europe will now have on US growth that this data didn’t reflect.

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