US: Factory orders in May were down 0.8% - Nomura

US factory orders in May were down 0.8% m-o-m, below the market consensus of a 0.5% decline, but core orders and shipments suggest modest improvements, notes the research team at Nomura.

Key Quotes

“As indicated in an advance report on durable goods orders, much of the decline in headline factory orders was driven by a 3.0% drop in volatile transportation goods orders. Excluding this component, durable goods orders were up steadily by 0.3%. Moreover, core capital goods shipment, a proxy for real business equipment investment, was revised up to a 0.1% increase (previously reported as -0.2%), implying steady improvement in business investment.”

“Further, core capital goods orders were revised upwards to a 0.2% increase (previously reported as -0.2%), pointing to an uptick in business investment in an upcoming month. These upward revisions suggest slightly better contribution from business investment to Q2 real GDP growth. However, manufacturers’ inventories fell 0.1%, driven by a sharp decline in petroleum and coal products inventories. This decrease may have been due to price effects as energy commodity prices have been trending lower in recent months.”