Data released on Monday showed Durable Goods Orders rose more than expected in May. Analysts at Wells Fargo point out the report presented gains despite softening demand for goods and signs of slowing activity in regional Fed manufacturing surveys. According to them, a broad-based gain in core capital goods shipments should lift estimates for second-quarter equipment spending.
Key Quotes:
“If you are looking for signs of slowing in the manufacturing sector, you won't find many in the May durable goods report. A stout 0.7% monthly increase handily exceeded consensus expectations for a scant 0.1% gain. The strength was broadly based, with most categories in the black for the month.”
“Nondefense capital goods shipments (including aircraft), which are a good proxy for equipment spending in GDP accounts, rose 1.6% in May. This marked the seventh consecutive gain in core shipments and signals equipment spending should hold up during the quarter.”
“With every category of durables, besides computers and related equipment, seeing stronger shipments last month, this report suggests broad-based improvement across industries.”