More upbeat data from US and GDP tracker - Nomura

Analysts at Nomura offered a review of the latest up-beat US data and their GDP tracker.

Key Quotes:

"Factory orders:

Factory orders increased 1.2% m-o-m in January (Consensus: 1.0%). Core capital goods (non-defense capital goods excluding aircrafts) shipments, a coincident indicator of business investment, posted an upwardly revised decline of 0.4% (previously reported as a 0.6% decline), suggesting business capital spending in the month was slightly better than the preliminary estimate. 

Core capital goods orders, a leading indicator of equipment investment, were also revised up to a 0.1% decline from a previously reported decline of 0.4%. However, the December reading was revised down to a 0.8% increase from a preliminary estimate of a 1.1% increase. 

While monthly changes tend to be volatile, the 3-month annualised change rate of core capital goods orders remained strong, marking a back-to-back double-digit increase. The improvement in orders in recent months indicates the continued recovery of manufacturing activities, reflecting the fact that the negative impact from lower energy prices and stronger dollar in the past is waning. That said, the pace of improvement has been much slower than the ISM manufacturing and regional Fed surveys suggest. We think that business sentiment could have been boosted in anticipation of expansionary fiscal policy. 

GDP tracking update: 

Core capital goods shipments for January, inputs into equipment investment of GDP, were revised slightly higher. However, after rounding, our Q1 GDP tracking estimate was unchanged at 1.5%. Upward revisions to non-durable goods inventories and core capital goods shipments for December pushed up our Q4 GDP tracking. Our Q4 GDP tracking estimate now stands at 2.0%, 0.1pp higher than the second Q4 GDP estimate of 1.9% by the Bureau of Economic Analysis."