The May durables report showed a headline number slipping from an April spike. But there was moderate strength in the details. New factory orders for durable goods in May declined 1.1 percent after jumping a revised 3.0 percent in April. Overall new orders for durables were worse than the market forecast for a 0.5 percent dip.
Excluding the transportation component, however, new durables orders rebounded 0.9 percent, following a 0.8 percent decrease in April. Capital goods orders continued to gain, rising 0.5 percent after a 0.7 percent boost in April.
The big negative in the report was the transportation component which dropped 6.9 percent in May. Nondefense aircraft swung down 29.6 percent after spiking 215.7 percent in April. Yes, you might call that category volatile. Defense aircraft slipped 7.1 percent in the latest month. But a very notable positive in transportation was a 0.7 percent boost in autos, continuing several monthly gains.
Advances were widespread in other components-including primary metals, machinery, computers & electronics, and other durables. Declines were seen in fabricated metals, communication equipment, and in electrical equipment. The last was negative but essentially flat
Nondefense capital goods orders excluding aircraft in May made a 2.1 percent comeback after falling 2.7 percent the month before. Shipments for this category fell 1.6 percent in May, following no change in April.
Year-on-year, overall new orders for durable goods in May were up 14.9 percent, compared to 19.1 percent in April. Excluding transportation, new durables orders came in at up 17.6 percent, compared to 18.5 percent in April.
On the release, equity futures rose, turning less negative. Also, initial jobless claims dropped more than expected. The good news is that manufacturing remains on an uptrend-a nice contrast to housing currently.