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US factory orders rebound in May
[WASHINGTON] New orders for US-made goods rebounded in May, suggesting a turnaround in manufacturing, though business spending will likely contract again in the second quarter amid cheaper crude oil as the Covid-19 pandemic depressed global growth.
The Commerce Department said on Thursday factory orders increased 8.0 per cent after falling 13.5 per cent in April. Economists polled by Reuters had forecast factory orders increasing 8.9 per cent in May.
Factory orders dropped 10.3 per cent year-on-year in May. Manufacturing, which accounts for 11 per cent of US economic activity, appears to be regaining its footing, but a resurgence in coronavirus cases amid the reopening of businesses threatens the budding recovery.
The Institute for Supply Management reported on Wednesday that its measure of national factory activity jumped to a 14-month high in June.
Unfilled orders at factories nudged up 0.1 per cent in May after falling 1.5 per cent in April. Inventories at factories rose 0.2 per cent, while shipments of manufactured goods increased 3.1 per cent.
Transportation equipment orders soared 82.0 per cent in May after tumbling 48.9 per cent in the prior month. Orders for motor vehicles and parts gained 28.3 per cent. Machinery orders rose 0.5 per cent. Orders for electrical equipment, appliances and components increased 1.0 per cent.
The government also reported that orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose 1.6 per cent in May instead of increasing 2.3 per cent as reported last month.
Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, increased 1.5 per cent in May, instead of rising 1.8 per cent as previously reported. Economists expect business spending to contract in the second quarter, the fifth straight quarterly decline.
The Atlanta Federal Reserve is forecasting gross domestic product plunging at a record 36.8 per cent annualised rate in the April-June quarter. The economy contracted at a 5.0 per cent rate in the first quarter, the sharpest decline since the 2007-09 recession.