In February, durable goods orders showed its first increase after six monthly declines. Durable goods orders rose by 3.4% M/M in February after falling by a downwardly revised 7.3% M/M in January. The surge was partially due to an 11% increase in capital goods orders, in part due to a 35% rise in defence orders. Looking at the details, orders for machinery (13.5% M/M) and computer, electronics (5.6% M/M) rose sharply, while primary metals (-0.6% M/M) dropped slightly. Excluding transportation, durables rose by 3.9% M/M. Shipments of non-defence capital goods less aircraft, which is a good predictor of business investment in equipment & software, rose by 0.6% M/M after showing a sharp plunge (-8.9% M/M) in the month before. Much of the better than expected outcome was due to defence related orders, but still it is a positive sign after the terrible figures in the previous months.

In February, new home sales rose by 4.7% M/M to 337 000, while a drop to 300 000 was expected. The previous figure was upwardly revised from 309 000 to 322 000. Sales were rising in the South and West and dropping in the Northeast and Midwest. The total number of homes for sale dropped from 340 000 to 330 000 and also months’ supply fell (from 12.9 to 12.2). Both the decline in inventories and the rise in sales is an encouraging sign especially after the other housing data released earlier this week.


EMU: German IFO indicator deteriorates slightly

The German IFO business climate indicator came out close to expectations in March. The headline index dropped slightly from 82.6 to 82.1, due to a decline in the current assessment (82.7 from 84.3). The expectations sub-index however, showed its third consecutive increase (81.6 from 80.9) in March. Although the headline index disappointed a bit as it could not follow the improvement in the PMI’s, it might be a hopeful sign that the expectations index improved somewhat in the previous months as the expectations sub-index was leading (compared to the headline index) in previous recoveries.


Other: Norges Bank cuts rates by 50bps and hints at further cuts

In the UK, the CBI distributive trades report showed a worsening in sales in March, after the improvement in the month before. Sales plunged to -44 (from -25) and are expected to remain very sluggish in April (-42). The three-month moving average improved somewhat (-39 from -42), while volume of orders placed (-47 from - 31) and volume of sales for time of the year (-42 from -39) deteriorated further. These data might be a bit disappointing as some were hoping that the improvement in the previous month might be longer lived.

The Norges Bank’s Executive Board decided yesterday to cut rates by 50 basis points to 2.00% citing that the outlook for the global economy has deteriorated. The Bank added that the key policy rate may move down towards 1% in the course of the autumn as the decline in the Norwegian economy will be more pronounced than previously assumed and although unemployment is still low, the Norges Bank added that it is rising rapidly.