Factory orders eked out a second straight 0.3 percent gain in May which is well short of Econoday's consensus for 0.9 percent. Yet the subdued result reflects nondurable goods, the new data in today's report where a 1.2 percent decline is likely tied to falling prices for energy products; durable orders in contrast were very strong, up a revised 1.8 percent versus last week's initial 1.7 percent gain.

A special plus is core capital goods (nondefense ex-aircraft) which are revised 1 tenth higher to a strong 0.7 percent gain to match April's gain. These point to business confidence. Shipments of core capital goods rose 0.3 and 0.5 percent in May and April for a respectable start to second-quarter nonresidential fixed investment.

Another big plus in May's report is a second straight 0.8 percent rise for unfilled orders which will have forecasters marking up factory payrolls in Friday's employment report as manufacturers work down the build. Total shipments rose 0.3 percent but follow sharp 0.6 percent declines in the prior two months. Inventories edged 0.2 percent lower versus May 0.3 percent rise.

Though there are plenty of positives in the data the headline is a disappointment, pulling down Econoday's consensus divergence index a few points to plus 5 indicating that recent economic data, in sum, are coming in only marginally ahead of expectations.

Factory orders are expected to rise 0.9 percent in May versus April's 0.4 percent gain. Durable goods orders for May, which have already been released and are one of two major components of this report, rose 1.7 percent on the month.

Factory orders represent the dollar level of new orders for both durable and nondurable goods. This report gives more complete information than the advance durable goods report which is released one or two weeks earlier in the month.

Investors want to keep their fingers on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth which is less likely to cause inflationary pressures. By tracking economic data like factory orders, investors will know what the economic backdrop is for these markets and their portfolios. The orders data show how busy factories will be in coming months as manufacturers work to fill those orders. This report provides insight to the demand for not only hard goods such as refrigerators and cars, but nondurables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production. All in all, this report tells investors what to expect from the manufacturing sector, a major component of the economy and therefore a major influence on their investments.