Data from the US Commerce Department for May showed that factory orders rose 0.7% in the month, following a decline of -0.7% in April. Excluding transportation goods, factory orders rose 0.4% and orders for non-durable goods rose 0.2% in May.
The data on new orders showed a gain of 1.3% in the month, which runs counter to yesterday’s report on manufacturing that showed a significant drop in new orders. Durable goods orders rose 1.3% in May, better than the expected rise of 1.1%.
Inventories of manufactured durable goods also rose in May, up 0.5% over April. This is the 28th rise in the past 29 months and is the highest inventory level since the Commerce Department began tracking the data in 1992. Transportation equipment rose 1.4%, and manufactured non-durable goods fell -1.2% in May. Inventories of petroleum and coal products fell the most, down -4.3% in the month.
Inventories, excluding transportation and defense goods, fell by -0.3% in May, causing some economists to fret over whether inventory levels are being drawn down by sales or by an anticipated decline in sales. Given other data we’ve seen recently, the latter appears to be the more likely cause for lower inventories.