US durable goods orders fall more than expected in May
A widely-followed lead indicator for spending on investment declined more sharply than expected in May, highlighting one of the main areas of weakness in the US economy currently, as referenced by policy-makers in their recent policy statements, but some economists were sanguine.
US durable goods orders dropped by 2.2% month-on-month in May to reach $230.7bn, but were 1.7% year-on-year, according to the US Department of Commerce.
Economists had been expecting a fall of 0.5%.
Orders from the transportation sector were one of the weakest areas, decreasing by 5.6% month-on-month to $81.94bn, led by a 2.8% drop in orders for motor vehicles and parts.
Excluding the transportation sector orders were down by 0.3% over the month to $148.8bn (consensus: 0.1%).
So-called 'core' capital goods orders, the most widely-tracked component of the report, which excludes orders for aircraft and defence, slipped 0.7% month-on-month and were 3.5% weaker versus a year ago.
"That sounds bad, but these numbers have tracked oil prices very closely, with a lag, because the fall in prices has driven a collapse in capex in the industry. With oil having rebounded and the rig count beginning to creep higher, core capex orders are now bottoming too, and will have clearly started to rise by the end of the third quarter," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.