New orders for durable goods declined for the second month,   with orders down $1.4 billion  (-0.6%) to $248.8 billion in May after an upwardly revised -1.0% drop in April to $250.2 billion. Transportation orders were down -1.0%, with a -4.2% drop in vehicles and a -7.0% drop in civilian aircraft orders offsetting a +21.1% increase in military aircraft orders. Non-defense capital goods orders were down $1.6 billion (-2.0%), while defense capital goods orders were up $1.7 billion (+15.1%), bringing overall capital goods orders up +0.2%. Excluding the drop in transportation lessened the overall new orders drop to -0.3%, but excluding the increases in defense spending brought orders down to a -1.5% drop.

A downward revision from +1.0% to +0.9% for consumer spending, along with a drop in business inventories from $20.2 billion to $13.9 billion, and an upward revision of the GDP price index from +1.9% to +2.2%, helped drop the final estimate of 2018 Q1 GDP +2.2% to +2.0%. Business spending compared to Q1 2017 was revised upward from +5.5% to +5.8%, with a +7.1% increase in nonresidential fixed investment, and a -0.4% drop in residential fixed investment. On a yearly basis, business fixed investment was up +5.4%, personal consumption expenditure (PCE) spending was up +4.5% for goods, and +2.1% for services, and government spending was up +0.7%, with a -0.9% drop in federal nondefense spending offsetting a +2.3% increase in defense spending. Inventory and capital consumption adjusted after tax corporate profits were up +16.9% compared to Q1 2017, and up +6.0% on a yearly basis.

Personal income was up +0.4% in May, with after tax, inflation adjusted disposable personal income up +0.2%. Consumer spending was revised downward for April from +0.6% to +0.5%, and slowed to a +0.2% gain in May. PCE prices increased +0.2% (+2.3% Y/Y), while core PCE inflation, which strips out food and energy costs, was up +0.2% (+2.0% Y/Y). PCE spending increased for both durable (+0.3%) and nondurable (+0.3%) goods, but a -0.2% drop in service spending kept PCE spending for May flat at 0.0%. On a yearly basis, PCE spending was up +0.9%, reflecting increases in service spending (+1.5%), and nondurable goods spending (+0.5%), and a -2.1% drop in durable goods spending. Personal savings, which measure the difference between disposable personal income and PCE spending, rose from $448 billion to $482 billion, for a +0.2% increase in the personal saving rate to +3.2%.