Grounding of 737 Max seen swaying some US economic data

Bloomberg

The grounding of Boeing’s 737 Max after a second crash is poised to start percolating through major US economic indicators ranging from international trade to durable goods, according to JPMorgan Chase & Co.
For now, the issues affecting the aircraft probably won’t have a short-run impact on gross domestic product because production continues, but they will affect the composition of GDP, with more inventory growth and less of a boost for business investment and gross exports, JPMorgan’s Chief US Economist Michael Feroli wrote in a note Thursday.
“Boeing is continuing to produce the plane, with most, if not all of the final product, being put into inventory pending the completion of the investigation,” Feroli wrote. “This means that GDP should be largely unaffected for now, as weaker exports and business investment would be offset by more stockbuilding.”
Still, Feroli warns things can change if the jetliner’s production is halted for a time. That would shave about 0.15 percent off the level of GDP, or about 0.6 percentage point from the
quarterly annualised growth rate of GDP in the three-month period that manufacturing halts, he said.
Chicago-based Boeing said that it will slow production of the 737 jets for three days next week, though work at the Seattle-area assembly line won’t stop. The work is needed to help recover from the impact of winter storms and supplier delays, the company said in an emailed statement.
Boeing has increased the 737 production rate to 52 per month, with 173 delivered in the fourth quarter, Chief Executive Officer Dennis Muilenburg said on a January conference call.
The company said at the time it expects the Max versions to account for approximately 90 percent of total 737 deliveries this year.
The 737 is the aviation industry’s best-selling model and Boeing’s top earner, racking up more than 10,000 deliveries and remaining in operation almost 50 years.
Wells Fargo & Co said last week that the Max grounding and delivery halt may have implications for US durable goods orders and equipment spending. Aircraft orders, which are highly volatile from month to month, accounted for almost a 10th of total durable goods orders over the past year, senior economists Tim Quinlan and Sarah House said in a note.

Garuda plans Boeing meeting to cancel $4.8bn 737 Max order
Bloomberg

Indonesia’s flag carrier said it plans to meet Boeing Co. officials next week to discuss the airline’s request to cancel its $4.8 billion dollar order for the troubled 737 Max 8 jet.
PT Garuda Indonesia, which told Bloomberg last week it wants to cancel its order for 49 Boeing 737 Max jets, has informed the U.S. aircraft maker of its plans and is scheduling to hold the meeting in Jakarta, President Director I Gusti Ngurah Askhara Danadiputra said on Friday. Still, the airline has yet to reach a decision on the cancellation of the Boeing 737 Max order, the company said.