- by New Deal democrat
There was some important housing data this morning; but first I wanted to drop a brief note on the advance report on manufacturing that also was released, because it is yet more confirmation of the (surprising) strong positive trend in that sector.
This report covered March, so included the first few weeks of the Iran war. While overall manufacturers new orders rose 0.8% (blue), the real surprise was in core capital goods orders, which importantly excludes the defense sector (red), which rose a sharp 3.3% to a new all-time high:
Suffice it to say, the impact of tariffs has been completely absorbed by the system. There are two important factors to note: (1) much of this probably reflects the Boom in AI data center construction; and (2) I saw a note last week suggesting that the closure of the Strait of Hormuz was causing manufacturers’ to speed up new orders in order to try to have supplies on hand before the delivery pipeline shut down. Needless to say, both of these suggest that there is likely to be a rapid reversal, because in the first case exponential growth must eventually end; and in the second hoarding is just front-running.
But for now, a very positive short leading sign in the manufacturing sector.
