Regional Business Surveys Bearish for New Orders

The economy is teetering. After the release of durable goods orders this morning, the Atlanta Fed’s GDPNow tracking model showed Q2 real GDP rising by a paltry 0.3% (saar), but up from 0.0% previously.Nondefense capital goods orders, a measure of capital spending, rose at a better-than-expected pace of 0.5% m/m (9.8% y/y) during May to yet another record high. However, some of the apparent strength over the past year reflected rapidly rising prices. Leading indicators of these orders suggest that their growth rate is heading lower:(1) The new orders component of the national manufacturing purchasing managers index (M-PMI) has been falling since early 2021, when it exceeded 65.0. It was down to 55.1 in May, but we’ll probably learn that it fell further when June data are released on Friday.