Key US durable goods data previewed - Nomura

Analysts at Nomura offered a preview for the next key US data in durable goods orders.

Key Quotes:

"We forecast a 0.5% m-o-m increase in top-line durable goods orders in March (Consensus: 1.3%). Incoming data suggest transportation components, which tend to be relatively volatile, would contribute strongly to top-line durable goods orders.

Vehicle assemblies and price data suggest that motor vehicle orders would decrease modestly. However, industry data suggest a potential strong jump in nondefense aircraft and parts orders would more than offset the weakness in motor vehicle and parts orders. 

Moreover, recent spending on military research and given the previous trend of this series, defense aircraft and parts orders would increase modestly. Excluding volatile transportation components, we expect durable goods orders to remain flat in March following a solid 0.5% m-o-m increase in February (Consensus: 0.4%). 

Although we think that the underlying trend of recovery in manufacturing activity remains steady, the output of durable goods excluding the transportation sector decreased 0.3% m-o-m in March, pointing to some slowdown in orders. 

On the other hand, business sentiment remained elevated, which may have positively affected businesses’ decisions on capital investment. In particular, the new orders index of the ISM manufacturing survey showed resilient momentum in March despite a slight decline to 64.5 from February’s 65.1. 

However, it is unclear how much of this recent optimism would result in actual increase in business capital spending. While we continue to expect the pace of recovery in the manufacturing sector to remain moderate in coming months, incoming non-survey data point to a pause in the recovery of non-transportation durable goods orders in March."