Durable Goods Orders Fall in May after Large April Upward Revision

- Durable Goods Orders for May fell 2.8% versus estimates of a 1% decline and an upwardly revised 1.1% gain in April.

- Durables Ex Transports for May fell 1% versus estimates of a .2% gain and an upwardly revised 2.5% increase in April.

BOTTOM LINE: Orders for US durable goods fell more than forecast in May, Bloomberg reported. The decline was spurred by fewer orders for aircraft, metals and machinery. May’s decline wasn’t a big surprise considering the prior two months’ gains were the best since August/September 2005. Total orders have never been up for four consecutive months since record-keeping began in 1992. Non-defense capital goods orders ex aircraft, a gauge of future business spending, fell 3% after a 2.3% surge the prior month. Unfilled orders for those goods rose .6%. Manufacturers had a 1.46 months’ supply of durable goods on hand at the current sales pace in May, unchanged from April. I continue to believe manufacturing will help boost US economic growth back to 3+% this quarter on inventory rebuilding and a subsiding of auto production cutbacks.