US durable goods orders climbed for the second month with a 1.8% gain while economists polled by Bloomberg had expected a fall of 0.9%. Excluding transportation, the gain was smaller at 1.1% but still edged out estimates for a dip of 0.5%. The improvement in new orders is largely the work of a 3.6% increase in the transportation sector along with a 7.7% rise in machinery and 9.5% improvement to capital goods. The upside in transportation is, however, misleading as vehicles and parts fell 8.1% while the volatile nondefense aircraft sector advanced sharply at 68.1%. Also of note, the ratio of inventory to shipments climbed to 1.90 from 1.88, the highest in at least a year.
Equity index futures are trading higher by nearly one percent as investors react to positive data including mortgage applications and positive revision in the OECD’s contraction estimate for the US. The group had previously expected a 4.0% contraction this year and zero growth to follow in the year ahead. The new forecast calls for downside of 2.8% in 2009 and growth of 0.9% in the year ahead. On the currency front, the greenback is trading lower against commodity exporting nations and the sterling, while holding onto slight gains over the euro and yen.