Orders and shipments of long-lasting durable goods fell in May, according to a preliminary Commerce Department report. One measure of business investment fell by the most in three months, but other reports show homes and consumers remain a cornerstone of the economy.

New orders fell 2.2% from April, a bigger drop than a consensus estimate from analysts, following two consecutive monthly increases. It was led by a 5.6% drop in transportation orders. Excluding them, new orders fell just 0.3%.

Shipments of manufactured durable goods in May, down three of the last four months, fell 0.2% following a 0.4% April increase. Shipments of transportation equipment, also down three of the last four months, led the decrease, falling 0.5%.

The declines in both new orders and shipments are broad-based throughout the durable goods manufacturing sector. A proxy of business investment, new orders for nondefense capital goods excluding aircraft, fell 0.7% in May from April, the fifth decline out of the past seven months. Orders in this category are down 3.5% in the first five months of the year compared to the same time in 2015, and it is expected to continue to drag down overall economic performance numbers.

On a more encouraging note, total durable goods orders are up 1.7% in the first five months of the year from last year – but shipments are down 0.1%. Also a first look at overall June manufacturing shows there are some improvements, with one gauge hitting a three-month high following big declines.

With the unexpected Brexit results, with 51.9% of Great Britain voting to leave the European Union, few are paying attention to this morning’s durable goods report, which continues to suggest weakness in terms of corporate investment here at home, according to Stifel Fixed Income Chief Economist Lindsey Piegza.

“For more than a year, businesses have remained sidelined, hesitant to invest in equipment, structure, and full-time, high-wage employees, a trend that has clearly continued into the second quarter,” she said. “Stagnant investment, moderate consumption, and sluggishly low inflation would have been enough to keep the Federal Reserve sidelined for the foreseeable future. Throw in this morning’s Brexit announcement, as well as the volatile market reaction, and some suspect the Fed’s next move may be an [interest] rate cut.”

New Home Sales Fall From April Surge

A separate Commerce Department shows sales of newly built, single-family homes dropped 6% in May, from a downwardly revised April reading that is still the best since 2008.

“Although new home sales are down from a robust reading in April, they remain solid and builder confidence in the market is growing — two indicators that the housing sector should strengthen throughout the year,” said National Associations of Home Builders Chairman Ed Brady.

Despite the month-over-month decline, new home sales so far this year are 6.4% ahead of last year’s pace. Sales of new homes in May, reported a day earlier, hit the highest level in almost a decade, indicating the overall home sales market remains resilient.

“At an annual pace of 551,000 units, new home sales are up relative to the first few months of 2016 as well as last year,” said NAHB Chief Economist Robert Dietz. “The sales market continues to make overall gains despite month-to-month volatility.”

Consumers Slightly Less Optimistic

A measure of consumer sentiment, the University of Michigan Survey of Consumers, shows they a bit less optimistic due to rising concerns about prospects for the national economy.

The final June reading fell 1.3% from the month before and is down 2.7% form a year earlier.

“While no recession is anticipated, consumers increasingly expect a slower pace of economic growth in the year ahead,” said Surveys of Consumers Chief Economist Richard Curtin.

He noted the persistent strength in personal finances will keep the level of consumer spending at relatively high levels and continue to support an uninterrupted economic expansion.

“Over the past 18 months, the Sentiment Index has shown only minor fluctuations about a very positive trend, with the June 2016 level a bit higher than the overall average,” he said.

The survey’s measure of consumer’s assessment of current economic conditions shows improvements in June from both the month before and a year earlier while expectations were down.