By Guglielmo Mattioli

On Tuesday April 26th at 8.30 am the Department of Commerce is releasing March’s data on new orders for American made long-lasting goods. Economists forecast a 1% increase from February negative performance.

Here’s what to look for in the report.

1) General trend, sign of a stabilizing economy.  

The report on long-lasting orders will tell us if the American economy is stabilizing. After a turbulent beginning of the year with headwinds coming from a lagging global economy and a strong dollar that hinders exports, economists expect to see in April’s report signs of a possible stabilization. The general forecast is a 1% increase in long-lasting goods orders, meaning a rebound from February’s 2.8% fall. If the forecast is confirmed, long lasting goods will settle at December 2015 levels.

“The economy is going to expand but is not especially strong and is keeping investors on their toes,” said Scott Brown, chief economist at Raymond James Financial Inc.

2) Watch out for airplanes.

The report’s numbers are often skewed by the transportation sectors orders which are volatile by nature. In particular Boeing new orders, which represents the lion share of transportation orders, can vary enormously from month to month. In February, Boeing confirmed only two orders but secured 69 new requests in March. Also, defense transportation orders have been declining and economists expect no exception for this month.

3) Are companies investing?

The last report was particular concerning because capital goods and equipment goods orders were both negative. Capital goods and equipment goods are indicator of whether companies are investing and  trust the economy to expand in the mid to long-term period. A lack of new orders in these sub-sectors, on the contrary, could mean that companies think the economy won’t grow anytime soon or worse, will start to shrink. Also under the spot light are inventory levels. Because inventory management have improved drastically in recent years, companies keep inventories at the minimum but a consistent trend of low inventories levels could speak to a shrinking or slowing economy.

“Despite some overall weaknesses, we expect to see early sign of stabilization, and 1.4% growth in manufacturing by the end of the year,” said Chad Moutray, chief economist for the National Association of Manufacturers.

4) Who grows, who shrinks.

Experts are looking to see which sub-sectors are still suffering and which is recovering. Orders related to companies working in the oil and commodities industry are expected to be on the negative side. Chemicals and furniture on the opposite, should rise. All exportable goods are still suffering from a strong dollar despite a slight recent depreciation. The quarter is estimated to end with an overall contraction.

5) Early Easter.

A particularly early Easter could have affected orders. Occasionally these kinds of anomalies in the calendar can slightly skew the numbers. In this case an early Easter could have sped up some of the production and placement of new orders requests. “A probable rebound should be taken with a grain of salt,” said Scott Brown, chief economist at Raymond James Financial Inc.

5 things to watch