US durable goods orders decline in May

Orders for goods made to last more than three years held-up better-than-expected last month, although weakness broadened out from that seen in the transportation sector two months ago.

Data released on Wednesday also revealed sharp upwards revisions to figures for April and a stronger-than-expected read on 'core' capital goods orders.

According to the Department of Commerce, durable goods orders declined in May at a pace of 0.6% month-on-month to reach $248.8bn.

Economists had penciled-in a drop of 1.0% over the month.

Excluding transportation, durable goods orders fell back by 0.3% on the month (consensus: 0.5%).

The bulk of May's decline originated in the transportation sector, where orders fell by 1.0% on the month to reach $86.13bn, following a 6.1% fall in April, thus eliminating all of the 6.9% jump seen in March.

Demand for electrical equipment was also weak, falling in May by 1.5% on the month to $11.34bn, alongside a drop of 1.2% in that for fabricated metal products to $33.44bn.

However, non-defence capital goods orders excluding those for aircraft, which some consider the best indicator of underlying demand, only dipped by 0.2% month-on-month to $67.87bn, after a rise of 2.3% in April.

April's print for total durable goods orders was revised higher, from a preliminary print of -1.6% to -1.0%.

"The decline in both headline and core durable goods orders in May indicates that growth in business equipment investment remained close to 5% annualised in the second quarter, much weaker than the growth rates seen in the second half of last year," said Andrew Hunter at Capital Economics.

"Nonetheless, overall GDP growth still appears to have rebounded strongly in the second quarter."