U.S. factory orders rebound sequentially in May

U.S. factory orders recovered in May. On a sequential basis, factory orders rebounded 0.4 percent, driven by a strong rise in non-durable goods orders. The outturn was above consensus expectations of 0 percent. Part of the miss relative to the forecast was due to the upward revisions to May durable goods orders. The preliminary report had indicated a 0.6 percent fall in total durable goods orders, driven by the transportation category.

Core capital goods orders were also recorded to have fallen in May. But, the final estimate released today, indicates that total durable orders dropped 0.4 percent sequential in May amidst upward revisions to orders for core capital goods and transportation. Non-durable goods rose strongly by 1.1 percent, as compared with a modest rise of 0.3 percent in the prior month. In the meantime, factory orders data for April were upwardly revised as well. Overall, today’s report indicates towards stronger momentum in manufacturing activity than was earlier indicated by the data.

Today’s data stimulated the estimate for structures investment in the second quarter and left the equipment investment tracking estimate widely unchanged, noted Barclays in a research report. On the inventories side, there were upward revisions to manufacturers’ durable goods inventories, but these were countered by softer-than expected inventories data for non-durable goods, thus leaving the inventories tracking estimate unchanged.

“In all, our Q2 GDP tracking was boosted by a tenth, to 5.0 percent, after rounding”, added Barclays.

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