In March, US durable goods’ orders surprised on the upside of expectations. On a monthly basis, durable orders dropped by 0.8% M/M, while the consensus expected a decline by 1.5% M/M. The previous figure was downwardly revised from 3.4% M/M to 2.1% M/M. The breakdown shows a decline in capital goods orders by 0.8% M/M due to a 14.4% M/M drop in defence related orders. Electrical equipment rose by 1.8% M/M, while primary metals (-3.2% M/M), fabricated metals (-1.3% M/M) and transportation (-1.4% M/M) dropped significantly. Shipments of non-defence capital goods less aircraft, which is a good predictor of business investment in equipment & software dropped by 1.7% M/M, after rising slightly (0.1% M/M) in the previous month. The inventory/shipments ratio jumped to 1.90, a new cyclical high.

New home sales dropped by 0.6% M/M to 356 000 in March, while a flat outcome was expected. The February figure was however significantly upwardly revised from 337 000 to 358 000. Month’s supply dropped further from 11.2 to 10.7 and the number of homes for sale fell from 328 000 to 311 000. The decline in both median prices (-12.2% Y/Y from -14.9% Y/Y) and mean prices (-10.3% Y/Y from -15.3% Y/Y) slowed in March.


EMU: German IFO indicator surprises on the upside

In Germany, the IFO business climate indicator rose from 82.1 to 83.7, while only a marginal improvement was expected. Looking at the details, the expectations subindex showed its fourth consecutive increase (83.9 from 81.6), while the current assessment rose from the cyclic low of 82.7 to 83.6. Together with the ZEW index and the PMI’s this outcome confirms that the pace of decline is slowing in the largest economy of Europe.


Other: UK first quarter GDP contracts by 1.9% Q/Q

In the UK, first quarter GDP contracted by 1.9% Q/Q, according to the advance estimate. Although all evidence pointed to a very weak figure, this might still be a bit disappointing as the consensus was looking for a decline by 1.5% Q/Q. On a yearly basis, GDP is down by 4.1% Y/Y.

UK retail sales however surprised on the upside of expectations in March. On a monthly basis, retail sales rose by 0.3% M/M while a decline by 0.3% M/M was forecasted. The previous figure was downwardly revised from 1.9% M/M to -2.0% M/M. The upward surprise was due to a 0.6% M/M rise in sales of food stores, while nonfood stores dropped by 0.2% M/M despite a 1.5% M/M boost in sales of textile, clothing and footwear. On a yearly basis, retail sales rose by 1.5% Y/Y.