US data solid, Q1 GDP tracking estimate unchanged at 0.8% - Nomura

Analysts at Nomura offered a review of the latest data from the US.

Key Quotes:

"There were no major surprises in the February trade balance report. February trade deficit came in at $43.6bn, which is a narrower gap than the prior month, mostly in line with market expectations (Nomura and Consensus: $44.6bn deficit). The January trade deficit was revised slightly to $48.2bn (previously reported as $48.5bn deficit). Goods exports were up 0.3% m-o-m, a modest increase after two months of strong increase. Goods imports were down 2.1% m-o-m after a steady increase in the four prior months and contributed to the narrowing of trade deficit in February. As expected, service imports declined moderately by 0.1% m-o-m, but service exports remained unchanged.

Factory orders: Factory orders in February increased 1.0% m-o-m, in line with expectations (Consensus: 1.0%). Durable goods orders rose 1.8% m-o-m, but durable goods orders excluding volatile transportation components were up only 0.5% m-o-m. Although there was no sign of significant acceleration, the February report suggests steady improvement in manufacturing activity. Consistent with this view, a healthy 1.0% m-o-m increase in core capital goods shipments, an indicator of current activity, also points to steady recovery. 

Q1 GDP tracking update: The final estimate of February’s goods exports was stronger than the advance estimate by the Census Bureau. Goods imports, on the other hand, declined more than estimated in the advance report. On balance, net exports in Q1 was likely stronger. Moreover, a revision to the January goods trade deficit, which was reduced to $59.7bn on a real basis (previously reported as a $65.1bn deficit), was slightly positive to our Q1 GDP tracking estimate. However, according to February’s factory orders report by the Census Bureau, durable and nondurable goods inventories at factories were weaker than we anticipated. Altogether, the positive contribution from trade data was offset by the drag from factory orders, leaving our Q1 GDP tracking estimate unchanged at 0.8%."