EmailThe durable goods orders report for April was a mixed bag, with the headline number coming in close to expectations and the ex-transportation number missing the mark by a tidy margin. Specifically, total durable goods orders rose 0.2% (Briefing.com consensus +0.3%) after a 3.7% decline in March while durable orders excluding transportation declined by 0.6% (Briefing.com consensus +1.0%) on the heels of a 0.8% decline in March.
As expected, the overall number was held back by transportation. In this instance, defense aircraft and parts was the main culprit with orders dropping 34.0%. Strikingly, orders for nondefense aircraft and parts rose by 7.2% after a 46.6% decline in March. There was some notable weakness in orders for machinery (-2.8%), fabricated metal products (-2.0%), and communications equipment (-16.9%), yet motor vehicles and parts remained strong with orders up 5.6% on top of a 1.7% increase in March. A good bit of attention is sure to be paid to the 1.9% decline in orders for nondefense capital goods excluding aircraft -- a proxy for business investment -- as that followed a 2.2% decline in March. This will raise concerns about a slowdown trend in business investment stemming from the macro uncertainty. Separately, shipments of nondefense capital goods excluding aircraft dropped by 1.4% after a 1.9% increase in March. The decline for this series will prompt a downward revision to our Q2 GDP forecast given our prior expectation that shipments would be flat.
