US durable goods orders rise by most in 7 months in March

US orders for long-lasting manufactured goods bounced back sharply in March from their steepest drop in four months, topping market expectations and adding to a view the American economy may be more resilient than a recent run of patchy economic data have suggested.

Durable goods orders jumped 2.7 per cent last month to $258.5bn from February’s downwardly revised 1.1 per cent drop, according to the US commerce department. That soared past the median expectations among economists for a 0.8 per cent rise.

It was the biggest rise since August last year, driven by transportation equipment, which the commerce department said has been up in four of the past five months.

Stripping out the volatile transportation sector, though, orders rose 0.4 per cent in March, twice as quickly as Wall Street forecast, and from February’s revised 0.2 per cent decline. Excluding defence, new orders jumped 2.3 per cent following a 1.7 per cent drop in February.

Orders for non-defence capital goods excluding aircraft, which are regarded as a proxy for business investment, jumped 1.3 per cent in March, versus expectations for it to remain flat from February’s revised 0.1 per cent increase. That marked the biggest such gain in 8 months.

Meanwhile, a separate report on Thursday showed the number of Americans filing for unemployment benefits jumped by the most in 19 months last week.

Initial jobless claims rose by 37,000 to 230,000 in the week ended April 20, above economists’ expectations for 200,000. “The consensus appeared to take seriously the unexpected drop in claims over the previous five weeks to just 193K, the lowest since September 1969,” said Ian Shepherdson, economist at Pantheon Macroeconomics.

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The US dollar remained relatively unmoved by this morning’s data, though. The dollar index remained 0.1 per cent higher around a two-year high of 98.262.

Although the benchmark US stock indices are trading at record highs, a run of disappointing data, including weak retail sales, and signals from the government bond market predicting an impending recession, raised concerns about a slowdown in first-quarter economic growth.

Those concerns have been partly allayed by a rebound in US manufacturing, a still-low unemployment rate, and the Federal Reserve scrapping its forecasts for interest rate rises this year.



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