We suggested that Goldman would trim its Q2 forecast following the abysmal Factory orders number earlier. Sure enough, here it comes. To our surprise, however, the cut was on 0.1%. This can only mean that Hatzius has left more dry powder for further GDP cuts as more and more high frequency economic "misses" rise to the surface.
1. Factory orders declined by 0.6% (month-over-month) in April, in contrast to consensus expectations for a small increase. The decline resulted primarily from a drop in the nominal value of petroleum orders/shipments due to lower oil prices. Durable goods orders were unchanged in April, and non-durable goods orders/shipments excluding petroleum products increased by 0.2%.
2. The report was a modest negative for our tracking estimate of Q2 GDP growth. In particular, growth in “core” durable goods shipments (nondefense capital goods ex-aircraft) was revised down. Non-durable goods inventories also increased less than we had anticipated. We therefore revised down our tracking estimate by one tenth to +2.0% (annualized).