US: Durable goods orders to post 0.5% m-o-m - Nomura

Incoming data suggest manufacturing activity has been improving steadily and for June, analysts at Nomura are forecasting a healthy 0.5% m-o-m increase in core durable goods orders (excluding transportation goods), following a steady gain of 0.3% in May.

Key Quotes

“Our forecast reflects a solid rebound in industrial production of durable goods excluding transportation components in June, following a weak reading in May. Further, the new orders index of the ISM manufacturing survey was elevated at 63.5 in June, highlighting continued momentum in the sector. Moreover, we expect a strong rebound in volatile transportation goods orders. Civilian aircraft and parts orders, which fell sharply in May, likely rebounded strongly in June considering new orders data from the industry.”

“The orders of defense aircraft likely have reverted to their mean following a sharp 30.8% drop in May. In addition, we think the motor vehicles and parts orders increased modestly by 0.7%, based on a healthy increase in real vehicle assemblies during the month. Consumer light vehicle sales have slowed in recent months, but new orders of vehicles at factories (which include orders from all sectors) suggest that the production of autos may not decelerate quickly in the near term. Altogether, we expect a 1.8% increase in topline durable goods orders for June.”