Factory order growth remains robust

Factory orders fell 1.4% in May, a larger decline than forecasts. Durable goods orders were upwardly revised to -0.6% from -1.1%, but nondurable goods orders fell 2.1% as petroleum refinery orders dropped 8.6%.

Nondefense capital goods orders excluding aircraft rose 3.9% in May, while shipments of these capital goods increased 1.4% in the month. The level of these capital goods orders thus far in the second quarter stands 23.1% above the first-quarter average at an annual rate (compared to a 15.1% increase in the first quarter) and shipments of these capital goods are up 17.4% at an annual rate on the same basis (compared to a 12.1% increase in the first quarter).
BOTTOM LINE

Trends in factory order growth remained robust in May as orders excluding transportation have risen 10.0% at an annual rate over the last three months (the ISM manufacturing new orders index for June suggests that growth moderated but remained solid at the end of the second quarter). Also, this report indicates that capital equipment spending has strengthened in the second quarter from already-robust growth rates in the first quarter and factory inventories are on track to add to second-quarter GDP growth.

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