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Factory orders increase broadly in February
NEW orders for US-made goods rebounded in February, boosted by strong demand for transportation equipment and a range of other products, pointing to a strengthening manufacturing sector.
Factory goods orders increased 1.2 per cent, nearly unwinding January's revised 1.3 per cent decline, the Commerce Department said on Tuesday.
Economists polled by Reuters had forecast factory orders rising 1.7 per cent in February after a previously reported 1.4 per cent drop in January. Orders surged 7.9 per cent on a year-on-year basis in February.
Orders for transportation equipment soared 7.0 per cent, lifted by a 26.2 per cent jump in the volatile orders for civilian aircraft. There were also increases in orders for machinery, which rose 1.2 per cent after slipping 0.2 per cent in January.
Orders for mining, oil field and gas field machinery climbed 1.8 per cent. Orders for motor vehicles shot up 1.5 per cent. Orders for electrical equipment, appliances and components surged 3.4 per cent while bookings for computers vaulted 3.5 per cent.
Manufacturing, which accounts for about 12 per cent of US economic activity is being supported by strong domestic and global demand, but a shortage of skilled workers and capacity constraints could hurt factory output.
A survey on Monday showed a slight ebb in sentiment among manufacturers amid rising concerns over labour shortages and the supply chain. Manufacturers also reported that tariffs on steel and aluminium imports imposed by President Donald Trump in early March were raising prices, "causing panic buying" and "leading to inventory shortages for non-contract customers." Mr Trump imposed 25 per cent tariffs on steel imports and 10 per cent for aluminium to shield domestic industries from what he has described as unfair competition from other countries.
The Commerce Department revised February orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans, to show them rising 1.4 per cent instead of the 1.8 per cent jump reported last month.
Orders for these so-called core capital goods fell 0.3 per cent in January. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 1.4 per cent in February as reported last month.Core capital goods shipments were unchanged in January.
Growth in US service industries cooled in March for a second month as orders settled back from the fastest pace in more than 12 years, a survey from the Institute for Supply Management showed on Wednesday.
Even with the main index's decline last month, service industries continued to expand at a hearty pace. An increase in order backlogs and slower delivery times, as measured by the purchasing managers' group, encouraged the services sector to step up hiring to meet demand.
The results are similar to the group's data earlier this week that showed factories expanded at a slightly slower pace as orders and production growth cooled. Nonetheless, both reports indicate the economy remains on solid footing, and the services gauge's three-month average of 59.4 is the best for a quarter in records back to 1997, according to data compiled by Bloomberg.
The services index covers about 90 per cent of the economy and spans industries such as retail, utilities, health care and construction.
A tight job market and elevated confidence are supporting demand for services, even as rising input prices threaten companies' profit margins. REUTERS, BLOOMBERG