US total durable goods orders fell by 0.5% in April from the previous month, in line with forecasts. But March’s figure was revised upwards to 5.1%. Excluding transport, durable goods orders rose by 0.5% on the month, against expectations of a 0.3% rise according to a Reuters poll, and March’s figure was also revised higher to 0.6% from -0.2%.
The underlying improvement in business investment is further evident by looking at the core figure for non-defense capital goods orders excluding aircraft, which rose by 1%, much stronger than forecasts of a 0.4% increase month-on-month and follows March’s upwardly revised 1.5% rise.
Business spending in recent months had suffered from the strong dollar, as well as from oil companies slashing their capital spending as a result of the slump in oil prices. There was strong demand for machinery orders in April and automobiles also gained. But orders for non-military aircraft and computers and electronic products fell.
The Markit Flash Services PMI for May out later in the day came in at 56.4, below forecasts of 57.0 and lower than April’s 57.4. But the small shortfall did not dampen sentiment too much as there was further positive data for the US with the release of consumer confidence and new home sales figures.
The Conference Board Consumer Confidence index for May came in slightly better than expected at 95.4, versus estimates of 95.2. While new home sales in April were also above estimates at 517k, versus forecasts of 510k by a Reuters poll. The month-on-month change for April was 6.8%, up sharply from March’s -11.4%, signalling a strengthening housing market that could aid economic growth this year.
The dollar was see-sawing against the euro in European trade. Having clawed back above the 1.09 level, the euro went into reverse again against the dollar after the release of the durable goods data. But the Markit Flash Services PMI that came out soon after, put a temporary break on the dollar’s surge before the strong housing data helped the dollar back to bull mode. The euro fell sharply after the housing data to 1.0895 in late European session. Against the yen, the dollar broke through the 123 level to 123.18 and the pound gave up on the 1.54 level to drop 1.5361 dollars.