U.S. Factory Orders Fall

New orders for U.S.-made goods fell more than expected in April, weighed down by declines in demand for transportation equipment and machinery, but the underlying trend continued to suggest strong momentum in the manufacturing sector.

Factory goods orders decreased 0.8 percent, the Commerce Department said on Monday. Data for March was revised up to show orders rising 1.7 percent instead of the previously reported 1.6 percent increase.

Economists polled by Reuters had forecast factory orders falling 0.5 percent in April. Orders advanced 8.3 percent on a year-on-year basis in April.

The monthly decline in factory orders is likely to be temporary amid reports of strong manufacturing conditions in May. A survey last week showed sentiment among manufacturers perking up in May amid a surge in new orders.

The Federal Reserve’s latest “Beige Book” report of anecdotal information on business activity collected from contacts described manufacturing as having “shifted into higher gear” in late April and early May.

Manufacturing, which accounts for about 12 percent of U.S. economic activity, is being supported by strong domestic and global demand.

Orders for transportation equipment fell 6.0 percent, pulled down by a 28.9 percent plunge in the volatile orders for civilian aircraft. Transportation orders increased 6.9 percent in March. Orders for motor vehicles rose 1.0 percent in April.

Orders for machinery dropped 0.7 percent after tumbling 3.1 percent in March. That reflected a decline of 11.6 percent in orders for mining, oil field and gas field machinery. Orders for industrial machinery fell 10.0 percent.

There was also a drop in orders for computers. But orders for electrical equipment, appliances and components increased 1.8 percent. There were also increases in orders for fabricated metal products and primary metals.

The Commerce Department also confirmed that April orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, increased 1.0 percent as reported last month. Orders for these so-called core capital goods fell 1.0 percent in February.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.9 percent in April instead of the 0.8 percent gain reported last month.

Core capital goods shipments fell 0.7 percent in March and were up 8.4 percent year-on-year in April. Business spending on equipment is slowing after double-digit growth in the second half of 2017.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell