Fleet Management

May Factory Orders Increase Following April Drop

July 03, 2001

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New numbers released Tuesday by the U.S. Commerce Department show factory orders in the United States increased the most in nearly a year.
The 2.5% increase in May follows a drop of 3.4% the month before.
The report is good news for the trucking industry — not only are many manufactured goods moved by trucks, but this also indicates increased factory shipments down the road.
Many analysts were surprised by the news, due in part to the poor showing in April, with most just predicting a 1.2%-1.5% increase for May.
The news follows numbers released Monday by the National Association of Purchasing Managers, showing industrial activity in June posted its best performance in seven months
The Commerce Department reports that, excluding the often volatile transportation sector, factory orders jumped by 2.3% in May, the best showing in a year. Orders for computers and electronic products increased 2.3% in May, after falling 13.7% in April. A huge 32.5% increase in orders for semiconductors was a major factor in the advance. Orders for industrial machinery rose 2.7% in May, after a 0.8% increase, while orders for electrical equipment and home appliances went up by 0.9%, after being flat in April.
Despite this most recent good news, there are still plenty of signs the economy is still lagging. May factory orders are down 6.2% from the same time a year earlier, and through the first five months of the year they are off 4.8% versus the first five months of 2000.
The manufacturing sector has been hit hard in the past year, with some analysts saying it has been going through a recession, and that has translated into less freight for trucking companies.
In the meantime, factories have been laying off workers hoping to whittle down excess inventory, which it looks like they did. Factory inventories fell 0.3% in May while shipments increased 2.6%. The inventory-to-shipments ratio fell to 1.37 in May, the lowest level since December and down from 1.41 in April.

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