2014.04.2411:22:00UTC+00Us Capital Spending Looks Set to Increase Firmly in the Second Quarter

Quotes from BMO Capital Markets:

- U.S. durable goods orders jumped 2.6% in March, beating expectations of a 2% gain. Boeing's wing prints did make a mark, as orders of nondefense aircraft and parts achieved 8.6% velocity. But it wasn't all Boeing. Excluding transportation, orders took expectations of a 0.5% rise and threw them off the cliff. They were up a solid 2.0% in March, the biggest monthly advance in over a year. And the improvement was spread out among all of the major sectors.

- Most importantly, core orders rose 2.2%, the largest increase since November. Combine that gain with a slightly smaller decline in February (-1.1% instead of -1.4%) and an unrevised 0.8% gain in January, and what you have is a solid 3.1% annualized gain in the quarter, the second improvement in a row.

- Looks like all of those anecdotal reports of companies with lots of excess cash planning to boost capital spending are proving accurate. The rise in core orders is good news for the Q2 M&E. This report is quite volatile and can, like all other reports, be revised in the next month. But it would take a big revision to change the view that capital spending looks set to increase firmly in the second quarter.