US: Factory orders in focus – Nomura

Analysts at Nomura explain that the US advance durable goods orders report from the Census Bureau indicated that new durable goods orders fell 3.7% m-o-m in January, driven by highly volatile transportation equipment orders.

Key Quotes

“Excluding transportation equipment orders, which tend to be volatile, durable goods orders fell 0.3%, below our and market expectations. However, we think this decline was likely a transitory pause following the strong surge in H2 2017. We remain optimistic about business investment in 2018 as the tax law, with immediate expensing and a lower statutory corporate tax rate, takes effect. That said, much of the positive effect will likely be seen in Q2 or Q3 as it may take time for businesses to adjust to changes in the tax code. On inventories, the factory orders report suggests steady increases in inventories at factories. We expect a solid contribution to real GDP growth from inventory buildup in Q1.”