"Factory orders jumped a larger than expected 1.1% in April as the durables
component was revised down marginally to -0.6% but nondurables surged 2.8% on
what was likely a mostly price-related spike in petroleum. Nondefense capital
goods ex aircraft orders, the key core gauge, still posted a sharp gain in
April after several declines, but the upside was revised down slightly to
+4.0%. Details bearing on GDP growth were negative overall. Inventories were
flat... we now see inventories subtracting 1.0pp from Q2 GDP growth, down from
our prior forecast of -0.6pp. Meanwhile, nondefense capital goods ex
aircraft shipments were revised lower in April to +0.2% from +0.5%... We now
see investment in equipment and software falling 2.2% in Q2 and overall
investment declining 0.5%, up from our prior forecasts of -2.9% and
-1.0%. Netting the inventory and investment adjustments, we reduced our
Q2 GDP forecast to -0.9% from -0.6%."