Durables Orders Fall, Claims Stay Low: U.S. Economic Takeaways

What you need to know about Thursday’s U.S. economic data:

DURABLE-GOODS ORDERS (FEBRUARY)

• Fell 2.8 percent after 4.2 percent gain (revised from 4.7 percent), third decrease in four months
• Orders for non-defense capital goods excluding aircraft dropped 1.8 percent (forecast was 0.5 percent decrease)
• Shipments of such capital goods slumped 1.1 percent (forecast was 0.3 percent gain) after 1.3 percent decrease in January (revised from 0.4 percent drop)

The Takeaway: The headline durable goods number was expected to come in weak, but the guts of Thursday’s report revealed even more bad news about manufacturing. The drop in shipments of non-military capital goods excluding aircraft means business investment will probably subtract from first-quarter growth as companies curtail spending. A quarterly decline in non-residential fixed investment, which also includes structures and R&D spending, would mark the first back-to-back decreases since 2009. Orders for business equipment were also down in February, meaning there may be little relief in the pipeline. After the report, economists at Barclays Plc lowered their first-quarter GDP tracking estimate to 1.4 percent from 1.7 percent, while Morgan Stanley cut its to 1 percent from 1.3 percent.

JOBLESS CLAIMS (WEEK ENDED MARCH 19)

• Rose by 6,000 to 265,000 (forecast was 269,000)
• Claims below 300,000 for 55 straight weeks, longest such stretch since 1973
• Filings in week ended March 4 now stand at more than four-decade low of 253,000 after annual revisions back to 2011

The Takeaway: A soft patch in the economy has yet to convince companies that it’s time to trim staffing levels. Firings near the lowest levels since the 1970s are evidence that employers are seeing enough demand to hold onto existing staff in the face of global headwinds. The prior week’s filings also were revised down -- a bullish sign for the upcoming payrolls report since it coincides with the Labor Department’s employment survey period for March. The jobless claims data illustrate the Federal Reserve’s view that there’s been "additional strengthening of the labor market" at the start of 2016.

CONSUMER COMFORT (WEEK ENDED MARCH 20)

• Fell to 43.6 from 44.3
• Current views of economy, buying climate weakest since mid-December
• Perceptions of personal finances rose to five-month high

The Takeaway: Consumer sentiment as measured by the Bloomberg Consumer Comfort Index has been stable for the entire year. The gauge has been in a 1 point range for 13 weeks, something that’s happened just three other times in its three-decade history. Personal finances are being underpinned by a solid labor market, while a 30-cent increase in a gallon of gasoline in the last month is weighing on household sentiment about the economy and whether it’s a good time to spend.

--With assistance from Tatiana Darie To contact the reporters on this story: Victoria Stilwell in Washington at vstilwell1@bloomberg.net, Michelle Jamrisko in Washington at mjamrisko@bloomberg.net. To contact the editors responsible for this story: Carlos Torres at ctorres2@bloomberg.net, Vince Golle, Brendan Murray

By: Victoria Stilwell and Michelle Jamrisko

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