U.S. headline durable goods orders fall sequentially in April

U.S. headline durable goods orders dropped in April. On a sequential basis, orders fell 1.7 percent, driven by a sharp decline in nondefense aircraft orders. At the core level though orders grew 1 percent. Core capital goods shipments also rose in April, following a subdued reading in the prior month. In the meantime, the March figure was upwardly revised by one-tenth at the headline level, but there were downward revisions to core orders. Overall, the April fall in durable goods orders was mainly due to a volatile category, and a negative signal is taken from the report, noted Barclays in a research report.

Delving into details, at the core level, most categories saw rises sequentially, barring machinery orders, which fell for the second consecutive month in a row. Orders for computers & electronics and electrical equipment remained strong. Orders for vehicles were also strong, rising 1.8 percent. Nondefense aircraft orders dropped sharply by 29 percent sequentially. This is a volatile category that is known to record large swings every month.

The sharp fall in aircraft orders and shipments more than countered the modest rises in core shipments and orders, and pushed equipment investment tracking estimate lower. Moreover, manufacturers’ inventories of durable goods were also lower than what was expected.

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