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U.S. durable goods orders drop sequentially in April

The U.S. durable goods orders dropped in April in sequential terms. It dropped less than consensus expectations. Durable goods orders fell 0.7 percent sequentially, as compared with consensus expectations of a drop of 1.5 percent. The data for March was revised considerably higher to 2.3 percent sequentially from 0.9 percent. This was driven by the base effects from the March revisions. In the meantime, April core goods orders remained flat on the month, against consensus expectations of a rise of 0.5 percent.

Core capital shipments dropped 0.1 percent sequentially. Both these components are an important input to the BEA’s estimate of equipment investment in GDP, and the core data is likely to be in line with weak business investment. Transportation orders dropped 1.2 percent sequentially, a smaller drop than anticipated. Durable goods orders, stripping transportation also fell 0.4 percent sequentially.

“A larger than expected upward revision to Q1 GDP (to 1.2 percent q/q saar from 0.7 percent) implies more momentum in activity going into the second quarter and led us to revise our Q2 GDP tracking estimate by one-tenth to 2.1 percent”, said Barclays in a research report.

Subdued durable goods orders in April and March’s upward revisions imply slightly less equipment investment than was anticipated.

At 18:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -7.66858. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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