US factory orders fall more than expected in May

Orders for US manufactured goods fell by 1.0% to $455.2bn in May after two months of increases, according to the Commerce Department on Tuesday.

It was worse than the 0.8% decline economists had been expecting and compared to a 1.8% increase in April.

Transportation equipment saw the biggest decrease by 5.7% to $81.8bn despite a 0.8% increase in demand for motor vehicles and parts. Defense aircraft and parts notably accounted for this decrease with a fall in sales by 35.3%.

Inventories fell by 0.1% and unfilled orders increased by 0.2%, indicating that despite a fall in demand, the industry is stable.

Inventories have been down 12 of the last 13 months falling to $619.7bn in May. The inventories to shipments ratio remained unchanged at 1.36.

Unfilled orders have been up four out of the last five months, increasing to $1,138.9bn. The orders to shipments ratio fell to 6.90 compared to 6.94 in April.

According to a survey by The Institute for Supply Management many procurement executives were worried that the situation in Britain with the EU referendum would hamper growth. These recent results may indicate that this may be the case in the short term but not in the long term.