- Millan Mulraine, deputy chief economist at TD Securities
Ahead of the widely-anticipated labour market figures, investors eyed a report from the Institute for Supply Management about the demand for manufacturing goods in the world's largest economy. Factory orders indicator gives an insight to the overall economic performance, as rising purchases signal that companies will increase activity in the foreseeable future in order to fill orders.
There have been concerns about future prospects of the U.S. economy, as first quarter's slump was steeper than it was projected. Nonetheless, factory orders improved above estimates, pointing at growth acceleration in the second quarter. The benchmark ISM factory survey signalled that nation's factory activity soared to 55.4 last month, accelerating from 54.9 in the fourth month of 2014. The institute has earlier erroneously claimed the gauge of activity fell to 53.2. Any reading above 50 threshold indicates contraction in the activity. When exclude the most volatile components like transportations equipment booking, factories logged the demand increases during six out of the last seven months. The main upside pressure in May came from booking for military hardware, as without this component indicator would have fallen 0.1%. With companies rebuilding their inventories and the number of new orders at factories standing at a five-month high, there is a high possibility growth will return back to 4.0% this quarter.
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