Macro watchers were treated to a double dose of upbeat reports on the state of the world’s largest economy Wednesday.
Most notably, orders for, and shipments of, non-defense capital goods excluding planes — so, business equipment — were quite firm in March, according to the Commerce Department.
Indeed, the 3.3% month-to-month increase on core capital goods orders counted as the best result since June of 2020, the second-largest MoM advance since September of 2017 and the third-largest since December of 2014.
Shipments of core capital goods — what counts, figuratively and literally — posted a 1.2% gain in March, a very solid encore after a 1.3% gain the prior month.
This is a testament to how the AI arms race is bolstering the US economy. All that capex is showing up in the aggregates. As Nomura’s Charlie McElligott put it, “Right now, ‘It’s the economy, stupid,’ and whether you like it or not, the AI story is a huge part of that.”
Consider this: Consensus for Wednesday’s core capital goods orders print was 0.5%. So, the actual result reflected a pace nearly seven times faster than economists’ collectively expected. The shipments print was double consensus.
Meanwhile, new construction, both overall and single-family specifically, rose sharply in March, according to a separate release.
As the figure shows, the 11% overall gain for housing starts was the largest since December of 2024, and the near 10% advance for single-family starts the best in over a year.
In terms of the annualized pace, the headline starts print, 1.5 million, beat every estimate. The single-family rate, 1.03 million, was the first >1 million readout in 13 months.
It wasn’t all good news, though: Permits, both overall and for single-family homes, retreated last month. That doesn’t bode especially well for April’s new construction data. Recall that builder sentiment printed a woeful 34 on the NAHB’s gauge this month.
All in all, Wednesday’s second- (third-?) tier government macro releases painted an encouraging picture for the final month of the first quarter. The BEA will release its advanced estimate of Q1 GDP on Thursday.
H, given our world of conspiracy theories, fake news and unabashed lying, how much faith can we put in ‘official’ statistics. When I look in the mirror these days, I’m not even sure it’s me.
I don’t see anything in any of these releases to suggest this data’s fudged. You kinda have to step back and ask yourself whether Donald Trump’s that clever. Is he willing to fire the BLS chief for reporting bad jobs numbers? Sure. Is it going to occur to him, in the middle of everything else he has going on, to micromanage, or even to ask someone else to micromanage, things like residential construction data and capital goods shipments in an effort to piece together, step by step, a decent GDP print? No. Almost surely not.
When it comes to conspiracies of any sort, the question to always ask yourself is, How many people would have to keep a secret in order to pull this off?
That’s a big part of what makes some of the more outlandish conspiracy theories (chemtrails, fake moon landing) so laughable. Well that and basic physics.
I’m going to guess that the rank and file employees at BLS are not big fans of Trump. If he were to order book cooking, someone who knows would talk.
In fairness though, the weather in March was really quite nice.
I am interested to know where that new SFH construction is occurring. None of the real estate guys that I follow have mentioned any new “hot-spots” recently — quite the contrary. Perhaps some of that is homes being rebuilt in areas of SoCal that were destroyed by the fires last year, or maybe it is more widely spread across the nation.