US: Moderation in business spending on equipment - Nomura

The March factory orders report from US suggests some moderation in business spending on equipment in March, according to analysts at Nomura.

Key Quotes

“We think this slowdown was likely transitory considering still-elevated business sentiment and firm demand, while there is some risk that a pickup in equipment investment which we anticipate in coming quarters could be more gradual than our expectation. Factory orders increased 1.6% m-o-m in March, partly driven by a strong pickup in transportation equipment orders. New orders for durable goods excluding transportation equipment were revised up to a modest 0.3% mo-m gain (previously reported as no change from the prior month), but backward revisions were mixed.”

“Shipments of core capital goods (nondefense excluding aircraft) were revised down to a 0.8% m-o-m decline (previously reported as -0.7%) and orders of these goods were lowered to a 0.4% m-o-m decline (previously reported as -0.1%). While we think this slowdown was likely transitory, it still points to the risk that a pickup in equipment investment could be more gradual in coming months than we anticipated.”