Economic Watch: Factory Orders Drop Again

June 2, 2015

By Evan Lockridge

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New orders for factory-made goods continue to disappoint, falling 0.4% in April from the month before and marking the eighth decline in the last nine months.

This follows a 2.2% increase in March from February, according to the U.S. Commerce Department report released Tuesday.

New orders to factories for long-lasting manufactured durable goods dropped 1% in April from March, the second decline out of the last three months. It was led by a 2.4% decline in transportation orders.

The level of shipments of manufactured goods was virtually unchanged in April compared to March’s gain of 0.5% from February.

Shipments of manufactured durable goods fell 0.2% in April, a decline from the 0.1% earlier reported by the Commerce Department. This is the third drop out of the last four months; March was the exception, with shipments up 1.5%.

The report also showed orders for non-defense capital goods excluding aircraft, seen as an indication of business confidence and spending plans, fell 0.3% in April, revised downward from a 1% gain in an earlier advance report. Shipments for these goods were also revised downward, showing only a 0.5% increase in April instead of the previously reported 0.8% gain.

Some analysts are blaming the report on a stronger U.S. dollar, which makes the cost of domestically produced goods more expensive overseas. In addition, lower oil prices have hurt demand for petroleum-related equipment.

The good news is, a separate report from Monday and a first look at manufacturing for May show conditions are getting better.

The Institute for Supply Management Purchasing Manager’s Index registered 52.8% for month, an increase of 1.3 percentage points over the April reading of 51.5%. The latest reading is the highest in three months. American Trucking Associations Chief Economist Bob Costello called this news “good for trucking" in his Twitter feed.

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