After two consecutive monthly declines, US factory orders showed a bigger than expected rebound in May. On a monthly basis, factory orders rose by 0.7% M/M, while the consensus was looking for only a marginal increase, by 0.1% M/M. The breakdown shows that durable goods orders rose by 1.3% M/M, up from the earlier reported 1.1% M/M increase, and non-durable orders rose only slightly, by 0.2% M/M.
The upward surprise is based in non-durable orders, as petroleum and coal product orders dropped just 0.2% M/M in May, while a bigger decline was expected. The inventory to shipments ratio dropped for the first time in three months, from 1.28 to 1.27. While the outcome was clearly above expectations, factory orders remain rather soft as the rebound only reversed the previous month’s drop. The three month change however remains negative, falling by 2.1%.