As the stock surge on escalating bad news accelerates, here is one more datapoint that should be good for at least 5 more S&P points: Goldman just lowered its Q2 GDP forecast even more, from 1.6% to 1.5%.
BOTTOM LINE: Factory orders increase, but weak inventory growth implies downward revision to Q2 GDP tracking estimate
Factory orders increased by 0.7% (month-over-month) in May, more than generally expected. Key underlying details in the report were mixed. On the one hand, orders and shipments of “core” durable goods (nondefense capital goods ex-aircraft) were revised up. On the other, inventory accumulation in the manufacturing sector was below our assumptions. Taking together, the news was a slight negative for our tracking estimate of Q2 GDP growth: we revised down by one tenth to +1.5% (annualized).