In April, durable goods orders rose by 1.9% M/M, while the consensus expected a more moderate increase. The previous figure was however sharply downwardly revised from -0.8% M/M to -2.1% M/M. Looking at the details, the improvement was led by a 23.2% M/M surge in defence capital goods orders. But the improvement was broadly based with transportation (5.7% M/M), electrical equipment (0.3% M/M), machinery (2.7% M/M), primary metals (1.0% M/M) and fabricated metals (3.8% M/M) all improving, while computers, electronics dropped by 2.7% M/M. Shipments of nondefence capital goods less aircraft, which is a good predictor of business investment in equipment & software dropped by 2.1% M/M, after falling by 1.7% M/M in the previous month. The inventory/shipments ratio dropped from 1.89 to 1.88 in April.

US new home sales showed a softer than expected rise in April. On a monthly basis, new home sales rose by 0.3% M/M to 352 000, while the March outcome was downwardly revised from -0.6% M/M to -3.0% M/M. Regional details show that sales were flat in the northeast and Midwest, falling in the west and rising in the south. The total number of new homes for sale dropped from 310 000 to 297 000 and also months’ supply dropped (from 10.6 to 10.1) in April. Although the headline figure was a bit disappointing, the inventory of homes available for sales dropped to the lowest level since May 2001, which is an encouraging sign.

In the week ended May 23, initial claims dropped by 13 000 from an upwardly revised 636 000 to 623 000, slightly lower than the consensus estimate of 628 000. Continuing claims on the contrary rose by 110 000 to 6 788 000, which is also rather close to expectations. This outcome confirms that initial claims stabilized somewhat in recent weeks, which might be another “green shoot”.


EMU: Also Belgian CPI drops below zero in May

In May, Spanish CPI fell deeper into negative territory. On a yearly basis, consumer price inflation dropped to -0.8% Y/Y (from 0.2% Y/Y), while a figure of -0.7% Y/Y was expected. Also in Belgium, CPI inflation came out below zero as the headline index dropped from 0.60% Y/Y to -0.37% Y/Y. After the German inflation data, these figures raise fears that also euro zone CPI will become negative in May.

Germanan unemployment rose by 1 000 in May, while the consensus was looking for a much higher figure (64 000). The previous outcome was slightly downwardly revised from 58 000 to 57 000. Looking at the details, the number of vacancies dropped by 60 000 in April. The unemployment rate dropped from 8.3% to 8.2% in May, while a slight increase was expected. It is however important to note that the figures were distorted by a law that forced the agency to change the way it counts the nation’s unemployment, which might at least partially explain the better than expected outcome.

In May, European Commission economic confidence showed the second consecutive improvement. The headline index rose from 67.2 to 69.3, slightly above the consensus estimate of 69.0. Looking at the details, confidence improved in the industrial (-34 from -35), services (-23 from -24) and retail (-15 from -20) sector, while consumer (-31) and construction (-34) sentiment stayed unchanged. The business climate indicator rose from an upwardly revised -3.26 to -3.17.


Other: UK CBI report shows fall back in sales

In the UK, the CBI distributive trades report showed a decline in sales after the sharp rebound in April. In May, sales dropped from 3 to -17, broadly in line with expectations. Also volume of sales for time of the year deteriorated (-36 from -12). Together with the monthly report, the CBI also released its quarterly survey, which showed that optimism improved significantly in May (-8 from -26). Employment rose from -49 to -29, while selling prices dropped from 38 to 12. For June, sales conditions are expected to remain weak.