US Durable Good Orders Fell in May Signalling Slowdown in Manufacturing

New orders for key U.S.-made capital goods unexpectedly fell in May and shipments also declined, suggesting a loss of momentum in the manufacturing sector halfway through the second quarter.

The Commerce Department said on Monday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 percent, the largest decline since December.

These so-called core capital goods orders were revised up to show an increase of 0.2 percent for April. They were previously reported to have risen 0.1 percent.

Shipments of core capital goods fell 0.2 percent last month after rising 0.1 percent in April. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

Economists polled by Reuters had forecast core capital goods orders rising 0.3 percent in May.

U.S. Treasury yields fell after the publication of the data and U.S. stock index futures slightly pared gains. The U.S. dollar .DXY was trading lower against a basket of currencies.

The report added to growing worries that an acceleration in economic growth in the second quarter may not be as fast as expected. Recent data on retail sales, manufacturing production and inflation have signaled softness and housing data has been mixed.

The weakness comes despite a continuing strong job market. The unemployment rate fell to a 16-year low of 4.3 percent in May.

via Reuters

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