US May factory orders fell 1.3%, a smaller drop than the -1.8% expected.
Factory orders track the value of new orders placed with U.S. manufacturers. The report covers durable goods and nondurable goods. Durable goods include items such as aircraft, autos, machinery, and electronics. Nondurable goods include chemicals, food, petroleum products, and paper.
US May Factory Orders and Demand Trends
Markets often look past the headline number because aircraft and defense orders can swing sharply. Therefore, traders also watch orders that exclude transportation and defense. They also track nondefense capital goods excluding aircraft for a clearer view of business investment.
The recent trend has been mixed, although it has looked firmer than during much of the post-pandemic manufacturing slowdown. In April, total factory orders rose 4.8% to $662.7 billion. That marked the fifth increase in six months.
Shipments rose 1.0% in April. Meanwhile, unfilled orders increased 1.7% to $1.569 trillion. Inventories also rose 0.3% to $959.1 billion, while the inventory-to-shipments ratio edged lower to 1.50.
Durable Goods Showed Transport Volatility
The May durable goods advance report pointed to sharp swings in transportation. Durable goods orders fell 4.5% after an 8.5% jump in April. That drop came with a 14.0% fall in transportation equipment.
However, orders excluding transportation rose 1.3% in the May durable goods report. That suggested the underlying manufacturing order picture was stronger than the headline durable goods figure.
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