A data point that I wouldn't have looked into directly, but it does show how an inventory correction plus a jump in new orders may lead to a short term bounce in GDP. First lets go David of the Disciplined Investor with the summary:
Many data points have been cited as green shoots since they are simply "less bad". For example, if earnings continue to decline, but at a lower rate, this has been cited as a positive or green shoot. Well, one data point that is actually positive is the New Orders minus Inventories (NO-I) data point.Reproduced chart below (original from Argus Research)
Back to David's analysis (bold mine):
Ten industries saw new orders increase with five showing declines. The issue, and you (EconomPic) highlighted this in one of your recent posts,I'll agree that it does point to a possible surprise on the upside in Q3 GDP, but the question remains whether an inventory correction can lead to a prolonged recovery.
"Mother of All Inventory Corrections"
is the five declining issues are contracting at a larger rate than the 10 growing industries.
Generally, a new orders index number above 48.8 is consistent with an increase in manufacturing orders. The new orders index for June equaled 49.2 although down from 51.1 in May.
In short, I do think it is a pretty positive print. I would like to see the new orders index find some stability though. Lastly, we need to see jobs created and simply come in at a "less bad" number.
Source: ISM / BEA