US: Factory orders likely to decline in May - Nomura

Analysts at Nomura expect the US factory orders to decline in May and in addition expect steady improvements in inventories.

Key Quotes

“Durable goods orders for May fell 1.1% m-o-m, driven by a sharp decline in transportation goods orders. Excluding transportation, durable goods orders increased only moderately by 0.1%. Reflecting these mixed readings, factory orders (which also include nondurable goods) are likely to decline in May. For topline factory orders in May, consensus is expecting a 0.5% decline. However, manufacturing activity still appears steady although month-to-month readings may post a decline. In particular, core capital goods shipments, a concurrent indicator of manufacturing activity, fell slightly by 0.1% in May, but its three-month average pace suggests steady improvement in activity. Additionally, we expect steady improvements in inventories as manufacturers enter a phase of intentional inventory build-up.”