US: Solid industrial activity in April – Nomura

Analysts at Nomura note that the total durable goods orders of US fell 1.7% m-o-m in April, lowered by a sharp decline in orders of transportation equipment (Nomura: -1.2%, Consensus: -1.3%).

Key Quotes

“Transportation goods orders fell 6.1% m-o-m as civilian aircraft orders, typically volatile, fell 29% m-o-m.”

“Durable goods orders excluding volatile transportation equipment, a better indicator of current activity, rose 0.9% m-o-m during the month, above our and market expectations (Nomura: 0.6%, Consensus: 0.5). This reading appears consistent with the steady pickup in economic momentum after a slightly weaker-than-expected Q1. In addition, the March estimate was revised up to a 0.4% m-o-m increase (previously reported as 0.1%). This report shows solid industrial sector activity moving into Q2.”

“GDP tracking update: The gain in orders of core capital goods was stronger than we expected in April, implying healthy growth in equipment investment in Q2. However, while inventories of durable goods at factories rose mostly in line with our expectations in April, modest upward revisions created a higher jumping-off point from Q1, reducing the change in inventories in Q2. Altogether, our Q2 real GDP tracking estimate is unchanged at 3.4% q-o-q saar. Q1 estimate is also unchanged at 2.1% q-o-q saar.”