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U.S. durable goods orders recover in February, equipment investment likely higher in Q1 2018

U.S. durable goods orders recovered in the month of February. On a sequential basis, headline durable goods orders rose 3.1 percent, as compared with consensus expectations of 1.6 percent. Moreover, the January print was upwardly revised by one-tenth at the headline level; however, it was downwardly revised by one-tenth at the core level. Most of the rebound in February was led by defense and non-defense orders, especially aircraft orders. The surprise relative to our expectation came from the solid rise in core capital gods orders that rose by a strong 1.8 percent on the month.

Nearly all categories, barring computers and electronics, recorded healthy growth in orders in February. This indicates that the rebound was widespread, and it is considered a positive signal. Moreover, core capital shipments also rose by a solid 1.4 percent sequential.

Above expected durable goods orders suggest higher equipment investment in the first quarter relative to what was penciled in prior to the report. Meanwhile, manufacturers’ durable goods inventories were slightly below expectation, lowering estimate of inventory accumulation in the first quarter, noted Barclays in a research report.

“In all, the Q1 GDP tracker was revised higher by one-tenth, to 1.9%, after rounding”, added Barclays.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -55.5613. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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