US Durable Good Orders Fell in May Signalling Slowdown in Manufacturing

New orders for key U.S.-made capital goods unexpectedly fell in May and shipments also declined, suggesting a loss of momentum in the manufacturing sector halfway through the second quarter.

The Commerce Department said on Monday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 percent, the largest decline since December.



These so-called core capital goods orders were revised up to show an increase of 0.2 percent for April. They were previously reported to have risen 0.1 percent.

Shipments of core capital goods fell 0.2 percent last month after rising 0.1 percent in April. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

Economists polled by Reuters had forecast core capital goods orders rising 0.3 percent in May.

U.S. Treasury yields fell after the publication of the data and U.S. stock index futures slightly pared gains. The U.S. dollar .DXY was trading lower against a basket of currencies.

The report added to growing worries that an acceleration in economic growth in the second quarter may not be as fast as expected. Recent data on retail sales, manufacturing production and inflation have signaled softness and housing data has been mixed.

The weakness comes despite a continuing strong job market. The unemployment rate fell to a 16-year low of 4.3 percent in May.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza