After two consecutive monthly declines, US durable goods orders rebounded in May. On a monthly basis, durable goods orders rose by 1.1% M/M, more than twice the expected rate (0.5% M/M), but the previous figure was downwardly revised from 0.2% M/M to -0.2% M/M. The details show that part of the strength was based in transportation (2.7% M/M) due to a 4.9% M/M increase in non-defence aircraft and also orders for vehicles and parts rose (by 0.5% M/M) in May. Excluding transportation, durable goods orders rose by a moderate 0.4% M/M.
Orders for machinery (4.1% M/M) and electrical equipment (1.1% M/M) rose in May, which was partly offset by a decline in orders for primary metals (-1.5% M/M), computers & electronics (-0.9% M/M) and fabricated metals (-0.2% M/M). Shipments of non-defence capital goods less aircraft, an important proxy for GDP, rebounded only slightly (by 0.4% M/M) after a 1.5% M/M increase in April. While the headline figure was significantly stronger than expected, the details are poor. Overall, the trend in orders has slowed significantly, although the average level of non-defence capital goods less aircraft is still up for the second quarter.