Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

3 Numbers: U.S. Durable Goods Slips In Annual Terms, Despite March Rise

Published 04/26/2016, 01:55 AM
Updated 07/09/2023, 06:31 AM
  • Monthly gain expected for US Durable Goods Orders, but annual pace to slip
  • The outlook for US manufacturing is still mixed at best
  • Will signs of firming continue in the US Services PMI report for April?
  • US Consumer Confidence Index is expected to tick higher

US economic data will dominate today’s news cycle, starting with the monthly report on durable goods orders for March. Later, we’ll see the flash data for the US Services PMI in April, followed by this month’s update of the Consumer Confidence Index.

US: Durable Goods Orders (1230 GMT) The outlook for manufacturing is still a mixed affair, but economists are looking for a round of good news in today’s hard data on durable goods orders for March.

Econoday.com’s consensus forecast sees a 1.6% increase in orders for last month compared with February -- an encouraging reversal after the previous 3.0% slide for the monthly comparison. A rebound is certainly welcome, but it may not mean much at this point. This volatile series is best viewed through a year-over-year lens, but by that standard the numbers point to a reversal of fortunes.

Headline orders have recently crawled back into positive territory for the annual change, posting a 1.7% gain in February vs the year-earlier level. The increase is the second consecutive advance and the fastest year-over-year growth in more than a year. But if today’s forecast for March holds, the implied annual pace is on track to slip into the red for the first time this year over year-earlier data.

A weak trend for orders isn’t terribly surprising in the wake of last week’s disappointing update on sentiment in the manufacturing sector for April. Markit’s purchasing managers’ index dipped to its lowest reading in more than six years. Although the PMI is still above the neutral 50 mark that separates growth from contraction, the recent slide suggests that the outlook for manufacturing is still mixed at best. Today's numbers may provide some relief, but a more convincing attitude adjustment on the plus side for manufacturing will have to wait.

US Durable Goods Orders

US: Services PMI (1345 GMT) The nascent rebound in the services sector is expected to extend into today’s flash data for April.

Firmer data in sentiment will help fend off worries that a recession is stalking services, which is the foundation of US economic activity. For several months through February, a downtrend weighed on two sentiment benchmarks of the sector. Markit’s Services PMI, in fact, slipped below the neutral 50 mark before returning to a modestly positive reading in March.

Note that the competing ISM Non-Manufacturing Index never went negative, although softer readings in this benchmark confirmed the downshift in the PMI data. But that may look like ancient history if today’s preliminary PMI estimate for April ticks higher again.

Nonetheless, there are still headwinds blowing in the US economy overall – headwinds that may yet play spoiler for services and beyond. This Friday’s “advance” GDP report for the first quarter is expected to highlight a softer trend. Growth in the first three months of this year is on track to stumble to a tepid 0.3% (seasonally adjusted annual rate), according to Atlanta Fed’s April 19 nowcast. If so, the US economy will post its slowest quarter gain in two years. But if today’s PMI update delivers encouraging news for April, the market may be tempted to look past a soft GDP release and consider the prospects for a rebound in the second quarter.

Services PMI vs ISM Non Manufacturing Index

US: Consumer Confidence Index (1400 GMT) Another clue on the outlook for the second quarter arrives in today’s monthly report on the mood on Main Street. In contrast with the weak numbers in the competing data from the University of Michigan’s Consumer Sentiment Index (CSI), the Conference Board’s Consumer Confidence Index (CCI) has been relatively steady this year.

Today’s CCI update for April is projected to deliver another round of relative calm. Briefing.com’s consensus forecast sees the benchmark ticking up to 96.7 for this month’s reading – slightly above March’s 96.2. In other words, CCI is expected to remain within the relatively tight range that’s prevailed in recent months. If so, the news will be a modest counterpoint to CSI’s gently sliding data.

To be fair, the recent run of mild declines for CSI don’t look worrisome at this stage. “None of these declines indicate an impending recession, although concerns have risen about the resilience of consumers in the months ahead,” the director of the University of Michigan consumer survey said earlier this month.

But those concerns will continue to resonate – particularly if today’s release from the Conference Board is surprisingly weak. Ditto if today’s numbers that precede the CCI report show more deterioration in the US economy.

Latest comments

2 out of 3 numbers available to pay for early access insiders - legalized insider trading - more on why Amerika is fubar - greed has killed the dream
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.