Durable Goods Confirm Strong PMI Readings in USA

Another strong reading in durable goods orders this morning.  This is important for two reasons:

1.  It confirms the recent strong PMI readings we’ve seen from the Markit PMI reports in the USA.

2.  Durable goods tend to have a very strong correlation with the S&P 500 (see chart below).

Econoday has the details on today’s report:

Manufacturing may be regaining momentum. While civilian aircraft added huge lift to December durables orders, gains were broad based. New factory orders for durables in December jumped a monthly 4.6 percent, following a boost of 0.7 percent in November. The median market forecast was for a 1.6 percent increase. The transportation component spiked 11.9 percent after a 0.5 percent dip in November. Excluding transportation, durables orders increased 1.3 percent, following a rise of 1.2 percent in November. The consensus called for a 0.4 percent rise in orders excluding transportation.

Outside of transportation, component increases were led by primarily metals, up 3.6 percent, and computers & electronics, up 3.3 percent. Also rising were fabricated metals, machinery, and “other.” The only negative component was electrical equipment, down 2.4 percent.

Chart via Orcam Financial Group:

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Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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