| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | -2.0% | -4.1% to 2.0% | -1.3% | 4.8% | 5.3% |
Highlights
Factory orders come a bit better than expectations at minus 1.3 percent in May from April compared with the minus 2.0 percent Econoday consensus forecast.
That is a fallback from the strong rise in April from March, now reported up 5.3 percent versus the gain of 4.8 percent previously reported. The swings largely reflect nondefense aircraft orders which surged by an amazing 167 percent in April frm March and fell back by 52 percent in May from April.
Excluding transportation, orders are up 1.9 percent in May and up 1.7 percent in April on month. The durable goods figure is unrevised at a decline of 4.5 percent in May from the advance durable goods report a week ago. Nondurables orders are up 2.2 percent in May and up 1.9 percent in April on the month.
Market Consensus Before Announcement
After durable goods orders were reported down 4.5 percent for May on a drop in aircraft orders, the call for factory orders is down 2.0 percent on the month.
Definition
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.
Description
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.
