- BNP Paribas
On Friday the US Durable and Core Durable Goods Orders were released, both failing to meet expectations. The Durable Goods Orders dropped 2.2% in May, while the forecast stood at a 0.5% decline. At the same time, the April's reading was revised down from 3.4% to 3.3%, contributing to the negative effect the actual weak reading had. Furthermore, the Core data, which excludes the transportation sector, also disappointed, having edged lower fro, 0.5% to –0.3%, compared to the 0.1% forecast. Nevertheless, the main reason of the depressing results was exactly the transportation sector, as it plummeted 5.6% during the previous month. As a result, weakness in these factory orders justify Janet Yellen's concerns of possible economic threats the US might be facing. She stated on her testimony earlier that week that not only falling oil prices, but also weak business investments are an issue for the US economy.
Moreover, due to the relatively poor reading of the US Manufacturing PMI last Thursday, which showed that demand for manufacturing and drilling equipment was lower, the factory orders are unlikely to post significantly better numbers in the next few months. On top of that oil prices plunged even further, amid UK leaving the European Union, creating only more problems not only for the US, but for the global economy overall.
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