Factory Orders Make Smaller Gains than Expected in April

Published June 05, 2013

| Reuters

New orders for U.S. factory goods rose in April, but not enough to reverse the prior month's plunge, adding to signs of a slowdown in manufacturing activity.

The Commerce Department on Wednesday said new orders for manufactured goods increased 1%. March's orders were revised to show a 4.7 % decline instead of the previously reported 4.9% tumble.

Economists polled by Reuters had forecast orders received by factories rising 1.5%.

Manufacturing has been hit by a combination of deep government spending cuts and slowing global demand, especially in China and the recession-hit Europe.

Data on Monday showed a gauge of national factory activity contracted in May for the first time in six months, dragged down by declining orders. 

This suggests the weakness in factory activity, also highlighted by a drop in industrial production in April, will probably persist for some time.

The Commerce Department report showed factory orders were lifted by an 8.4% jump in transportation equipment on the back of strong orders for automobiles, and civilian and defense

Orders excluding the volatile transportation category slipped 0.1% after falling 2.8% in March.

Outside transportation there were gains in orders for machinery, computer and electronic products, primary metals and electrical equipment, appliances and components.

Unfilled orders for manufactured goods rose 0.3% and were up 0.8% excluding aircraft, a positive sign for factories. Shipments fell for second straight month. 

Stocks of unsold factory goods edged up 0.2%, showing no sign inventories are piling up, which should help the sector in the long-run. Factory inventories account for more than a third of business inventories.

The inventories-to-shipments ratio was 1.31, the highest since June 2012, and up from 1.30 in March. The unfilled orders-to-shipments ratio increased to 6.26 from 6.21. 

The Commerce Department also said orders for durable goods, manufactured products expected to last three years or more, rose 3.5% instead of the 3.3% increase reported last week.

Durable goods orders excluding transportation were up 1.5% rather than 1.3%.

Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - increased 1.25 as previously reported.