There are two new reports on the economy worth mentioning this morning. First, data from the Census Bureau showed that new orders for U.S.-manufactured durable goods (items meant to last at least three years) rose in January by $4.0 billion (1.8 percent) to $230.4 billion. That was the first monthly gain since November but not enough to keep the year-over-year change in positive territory. “Core” durable goods orders, which exclude the volatile transportation component, slid by 0.2 percent in January, much worse than the 0.5 percent increase economists had expected. Orders for nondefense capital goods excluding aircraft, i.e. core capital expenditures, an important proxy for U.S. business investment, fell by 0.4 percent in January, the largest decline since September. On the bright side, headline growth in durable goods orders could accelerate in the year ahead due to the hike in defense spending proposed by President Trump this morning.
Elsewhere, a report from the Federal Reserve Bank of Dallas showed that business activity in the southern region of the country continued to rebound this month, with the general activity index lifting from +22.1 to +24.5 in February. That was the highest print since April 2010 and the fourth positive (expansionary) reading in a row after nearly two years of contraction. The production index, a key measure of state manufacturing conditions, rose to the best level since September this month, and measures of capacity utilization and employment also improved. However, current gauges of new orders, shipments, hours worked, and capital expenditures all deteriorated slightly in February, as did many forward-looking (six months ahead) indicators. Comments from survey respondents were largely mixed but one manager stressed that “We are seeing new orders from customers that were essentially flat for the past 22 months. Outlooks in all major industries have increased, and the uncertainty for federal regulatory policy has eased.”
Sources: Econoday, Bloomberg, Twitter, ZH, U.S. Census, FRBD, FRBSLPost author: Charles Couch