Factory orders were much weaker than expected in May, contracting by 0.5% vs +0.2% survey for the first decline in 4 months, and downward revisions to prior (0.4% Apr down from 0.7%).

• The 3M/3M annual run rate actually jumped to a 6-month high 3.9% , mostly reflecting the dropping out of the sharp declines at the start of 2024. But the level of SA factory orders is at levels seen previously in mid-2022, and mid-2023 - in other words, orders have been basically flat for a couple of years.
• Ex-transport factory orders came in at -0.7% M/M (after +0.5% in April), essentially flatlining over the last couple of years as well.
• The durable goods report was little changed in the final, with core capital goods orders confirming the 0.6% contraction in the advance report.
• With the May Shipments, Inventories and Orders data set in hand, business capex and goods output appears to be softening, reflected in contractionary ISM manufacturing readings and sub-0.5% Y/Y growth in industrial production.