US: Durables goods orders surprised expectations – TD Securities


The TD Securities analysts provide a detailed preview of the US Durable Goods Orders data released on Wednesday that showed a bigger-than-expected jump in the headline numbers.

Key Quotes:

“Durables goods orders surprised expectations in the preliminary report, jumping 2.4% m/m in Dec (TD -0.3%; consensus 0.4%). The gain was largely explained by an outsized jump in defense orders, which more than offset a notable 75%m/m tumble in the nondefense aircraft segment (i.e. Boeing).

However, the details were mixed, with ex-transportation orders dropping -0.1% and core capex orders falling -0.9% m/m. Looking at shipments, the data was more supportive for GDP calculations with non-defense capital goods rising 0.5% in Dec.

Separately, the Richmond Fed manufacturing index surged notably above expectations, posting a 25pt gain to 20 in Jan. The increase was broad-based. This was also reflected in our ISM-adjusted index, which rose to 60.8 from 51.5 in Dec — its highest level since Sep 2018. Together with the results from other regional surveys, the Richmond index suggests positive momentum for the manufacturing sector in Jan.”

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