April's durable goods figures confirm that, following the earlier disruption caused by the unseasonably cold weather in the Northeast and the West Coast port dispute, the factory sector was getting back on track as spring approached.
U.S. headline durable goods orders fell by 0.5% m/m in April, but that decline followed a massive 5.1% m/m rebound in March. Stripping out defence, orders increased by 0.2% m/m in April. Orders for commercial aircraft fell by 4.0% m/m last month, but that followed a 40.7% m/m increase in March. Excluding transportation, core orders increased by 0.5% m/m in April, after a 0.6% m/m gain in March.
Most encouragingly, non-defence capital goods orders (ex. aircraft) increased by 1.0% m/m in April, following a 1.5% m/m gain in March. Shipments in the same category increased by 0.8% m/m last month and 1.0% m/m the month before that.
"The upshot is that the anticipated pick-up in the growth rate of business investment in equipment in the second quarter appears to be firmly on track. This only makes up more confident that second-quarter GDP growth will be a healthy 2.5% to 3.0% annualised." said Capital Economics
