So much for a moderate decline in the economy. As we warned back in February when we noted that the non-seasonally unadjusted collapse in durable goods was historic, now that the aftereffect of a record warm winter is fully gone, the March durable goods data comes in and it was a complete disaster: instead of dropping modestly by 1.7% as the consensus expected, the March actual print was a massive 4.2% decline, worse than the worst Wall Street forecast, or the most since January 2009! And it was not only airplanes as many were expecting (despite Boeing's just announced epic sales): the ex-transportation number was down 1.1%, on expectations of a 0.5% gain; even worse, capital goods new orders slid 0.8% on expectations of a 1% gain. And as usual inventories hit another record high. Overall, a horrendous print which confirms that the entire myth of a recovery in Q1 was warm weather driven, and that about 1% of the 2.5% or so consensus GDP was due to the weather. Expect the downward GDP revisions to come any second. But don't expect the market to react to this news at all: after all if anything, this simply makes NEW QE/LTRO more likely and is to be cheered by all habitual gamblers.
Worse than lowest estimate ( a 2 sigma miss)...
and Durables Goods Change has missed expectations 3 months in a row to its worst since Jan 09...
From the report:
New orders for manufactured durable goods in March decreased $8.8 billion or 4.2 percent to $202.6 billion, the U.S. Census Bureau announced today. This decrease, down two of the last three months, followed a 1.9 percent February increase.
Excluding transportation, new orders decreased 1.1 percent. Excluding defense, new orders decreased 4.6 percent.
Transportation equipment, also down two of the last three months, had the largest decrease, $7.1 billion or 12.5 percent to $49.7 billion. This was due to nondefense aircraft and parts, which decreased $7.7 billion.
Shipments of manufactured durable goods in March, up three of the last four months, increased $2.0 billion or 1.0 percent to $208.8 billion. This followed a 0.3 percent February decrease.
Machinery, up four of the last five months, had the largest increase, $2.0 billion or 6.5 percent to $32.9 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 3.1 percent February increase.
Inventories of manufactured durable goods in March, up twenty-seven consecutive months, increased $1.7 billion or 0.4 percent to $375.1 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.3 percent February increase.
Transportation equipment, also up twenty-seven consecutive months, had the largest increase, $0.8 billion or 0.7 percent to $118.0 billion. This was also at the highest level since the series was first published on a NAICS basis.
Finally, February was also worse than previously reported:
Revised February Data
Revised seasonally adjusted February figures for all manufacturing industries were: new orders, $467.5 billion (revised from $468.4 billion); shipments, $462.9 billion (revised from $462.6 billion); unfilled orders, $930.1 billion (revised from $931.1 billion); and total inventories, $616.7 billion (revised from $616.8 billion).