- Doug Handler, chief U.S. economist at Lexington
Durable goods orders are considered to be a leading indicator, as businesses increase their spending signalling willingness to boost activity in attempt to fill the orders. It is also important to mention that figures are highly volatile and only a huge deviation from the expected value can have a strong market impact. During the last five months, the most traded currency pair was fluctuating in a range from 11 to 23 pips five minutes before and five minutes after the news release. This week the most traded currency pair moved lower to 1.3783 immediately after the data; however, later it soared above 1.38. Thus, how the latest data can be interpreted?
The Census Bureau said orders for long-lasting goods advanced 2.2% last month, marking the strongest reading since November and accelerating from January's revised reading of a 1.3% contraction. The data surprised markets to the upside, as consensus forecast stood for a 0.8% increase. Core durables, which exclude volatile transportation segment, advanced only 0.2%.
The improvement, however, was mostly led by orders for civilian and defence aircraft. Booking for non-military capital goods stripping out aircraft plunged 1.3% in the period after a 0.8% increase in January. Bad weather has mudded the outlook for the companies by restraining consumer spending and the rebound in the property market.
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