February Durable Goods Orders Jumped Ahead Of Global Coronageddon, Thanks To War-Spending

Preliminary data for February durable goods orders showed a surprise improvement (up 1.2% MoM vs expectations of a 0.9% drop) as it appears COVID-19;s impact hadn’t begun to hit quite yet. This resurgence has pushed the YoY growth in headline durable goods orders back into the positive (up 3.0% YoY – the best since January 2019)

Source: Bloomberg

However, ex-Transportation, durable orders fell 0.6% MoM – the biggest drop since Feb 2016… this is the 8th straight month of YoY declines in core durable goods orders…

Source: Bloomberg

And core capital goods orders, which exclude aircraft and military hardware, fell 0.8% after a revised 1% advance in January, because what drove the headline was a 25.7% MoM spike in defense capital goods…

Finally, we note that Capital Goods New Orders (non-defense, ex-aircraft) – a proxy for capital spending and investment – disappointed, falling 0.8% MoM (worse than the 0.4% drop expected.

All of which suggest things were not exactly roaring even before the global virus impact hit.