U.S. factory orders fall sequentially in April

U.S. factory orders dropped 0.2 percent sequentially in April, coming in line with consensus expectations. However, the orders figure for March were upwardly revised, making the April report slightly better than anticipated. However, it is hardly a signal of the most rapid rate of activity in the manufacturing sector given the expansionary readings that was seen in some of the purchasing manager surveys. The ISM manufacturing index for instance, strengthened in May and the new orders component was up to 59.5, a level that is historically associated with a more rapid pace of orders growth.

The upward revisions to March imply slightly stronger inventory accumulation in comparison to the assumptions, and improved momentum in equipment spending, noted Barclays in a research report.

“Our Q2 GDP tracking estimate increased by one-tenth to 2.1 percent”, added Barclays.