EmailDurable goods orders rebounded in May, increasing 1.9% after declining an upwardly revised 2.7% (from -3.6%) in April. The Briefing.com consensus expected durable goods orders to increase 1.5%.
With the exception of miscellaneous durable goods, orders in every other sector were positive in May and outperformed their levels in April. This type of widespread growth is at odds with the recent slowdown seen in the ISM reports but is in-line with the growth in industrial production. Therefore, despite the apparent weakness suggested by the declining ISM levels, demand for manufacturing goods remains firm.
As expected, the aircraft industry led the turnaround. Nondefense aircraft orders jumped 36.5% after falling 29% in April. Defense aircraft orders increased 5.5% in May.
Surprisingly, the pullback in motor vehicle assemblies did not adversely affect motor vehicle orders. Orders increased 0.6% in May after falling 5.3% the previous month.
Excluding transportation, durable orders increased 0.6%. The consensus expected these orders to increase 0.7%. \
Business investment strengthened in May. Orders of nondefense capital goods excluding aircraft increased 1.6% after falling an upwardly revised 0.8% (from -2.3%) in April. Shipments, which factor directly into GDP, increased 1.4% and should provide a solid boost to our second quarter GDP forecast.
