Durable goods order surge on consumer optimism
|Spring cleaning has a new counterpart this year, spring buying. Americans took their labor market prosperity to the stores in March with the biggest jump in durable goods purchases in eight months.
New orders for long-lasting consumer products rose 2.7% last month and the February decline was trimmed to 1.1% from 1.6%, according to Commerce Department figures on Thursday. This was three times the consensus prediction of 0.8%.
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Retail sales, the overall category of which durable goods are a subset also came in much better than anticipated last month. Total sales rose 1.6% almost double the 0.9% forecast and the control group component of gross domestic product climbed 1.0% more than twice its 0.4% prediction.
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Household spending is about 70% of US economic activity and consumers are responding to the excellent labor markets and rising wages. Non-farm payrolls added 196,000 new positions in March, putting the 3-month moving average at 177,700 despite the anomalous 33,000 in February.
Wages increases are at the top of their range, gaining 3.2% in March just below the 3.4% decade high in February.
Consumer optimism has also recovered smartly from its shutdown induced plunge in January. The University of Michigan Consumer Sentiment Index registered 98.4 in March, well above the 91.2 January drop and on the high end of its four year range.
Reuters
Business capital goods orders excluding aircraft rose 1.3% in March far ahead of the 0.1% forecast and the largest gain since July, led by purchases of computers and electronic goods. The February result was revised up to 0.1% from -0.1%.
Shipments of these business capital goods which are used by the Bureau of Economic Analysis (BEA) to calculate GDP dropped 0.2% in March but the prior month was revised to 0.2% from -0.1% so the economic effect is likely moot. First quarter GDP will be reported on Friday at 8:30 am EDT, 12:30 pm GMT.
Despite nearing a record for the longest post-war US economic expansion the current run of positive developments are driven by gains in the labor market and income. As long as those continue the US consumer and the economy itself is unlikely to run out of steam.
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