US March Factory Orders: Despite headline miss, a firming in core capital goods - Wells Fargo

Toady’s factory orders report showed a gain of 0.2%, below the 0.4% expected. Analysts from Wells Fargo added that February’s numbers were revised higher and noted that orders and shipments of core capital goods were up. 

Key Quotes:

“After firming in recent months, the factory sector has lost momentum. The scant gain of 0.2 percent in March in today’s factory orders report is the smallest gain since factory orders dipped in November.”

“After a soft print for March durable goods orders last week, consensus expectations were already running a bit low at just 0.4 percent. The fact that the actual outturn was smaller than that is mitigated somewhat by the fact that the 1.0 percent gain for February factory orders was nudged higher by 0.2 percentage points—the same magnitude as the “miss” for March. On that basis, we can think of this as a roughly in-line report.”

“Today’s revision puts the March increase for both orders and shipments of core capital goods at 0.5 percent. The firming here corroborates the fairly solid pace of business fixed investment spending reported in first quarter GDP while alleviating some of the concerns about a loss of momentum for cap-ex heading into the second quarter.”