US Macro: Durable Goods Orders April 2017

US Macro: Durable Goods Orders April 2017

Yesterday the Durable Goods Orders data for March 2017 was published (here).

CORE (Excluding Transportation)

DGO April 2017.png

Feb-17 155,744 0.71%
Mar-17 155,417 -0.21%

As you can see the data point is not good at all, there is been a lower number of new orders, this means that there is been a contraction in new orders. This is the first time since the month or June 2016 that we see a contraction in this number.

We tend to use this indicator as a confirmation indicator, this means we use it to see if our macro ideas are on the right track. If we are bullish but Durable Goods Orders and slowing down then we should put our views on the check, because this is suggesting we might be wrong.

Does this mean we suddenly have to turn bearish? No, not at all. But we should evaluate our positions and see what happens with the rest of the data. For now, what I’m going to do is dive into the Durable Good Orders data trying to figure out what went wrong during March, what sectors or the economy are having problems.

Primary Metals

Feb-17 19,095 3.14%
Mar-17 19,246 0.79%

Fabricated Metal Products

Feb-17 31,488 0.10%
Mar-17 31,249 -0.76%

Machinery

Feb-17 31,618 0.73%
Mar-17 31,550 -0.22%

Computers

Feb-17 24,867 -0.31%
Mar-17 24,818 -0.20%

Electrical Equipment

Feb-17 9,817 2.20%
Mar-17 9,858 0.42%

As you can see there’s been a slowdown in every single part of the indicator. This isn’t very good because it means that everybody is slowing down. It’s not a sectoral problem but a situation that affected the whole economy.

I’m going to put my bullish views on check for now. I want more information to confirm, this could be just a recess because of a weird month, but it could also be a change in how the economy is going to perform. Let’s see how the different indicators (PMI, NMI, etc.) come out next week.  I’ll keep a close eye on it and post as fast as I can.

Thanks for reading.

Nuño Pérez del Barrio
@nuopb

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