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The preliminary report released on Thursday showed that US Durable Goods Orders rose more than expected in May (+15.8% vs 10.9%) While this is a step in the right direction, revisions made past declines worse and sentiment is still soft, argue analysts at Wells Fargo. 

Key Quotes: 

“Both orders and shipments of core capital goods were also better than expected with shipments rising 1.8% and orders adding 2.3%. These measures are useful for gauging business spending and while the jump in May is welcome, the trends are weak.”

“The overall level of durable goods orders is still only a shadow of what it was before the crisis, down by more than 20% since February.”

“We should get a few more jumps in the next few months as activity gradually comes back online following the shutdowns, but the fact that ISM new orders component remains well into contraction territory indicates it will be a tough slog back to where we started.”