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US factory orders rise, but business equipment spending slowing
[WASHINGTON] New orders for US-made goods rose more than expected in March, boosted by strong demand for transportation equipment and a range of other products, but there are signs that business spending on equipment is slowing.
Factory goods orders rose 1.6 per cent, the Commerce Department said on Thursday. Data for February was revised up to show orders jumping 1.6 per cent instead of the previously reported 1.2 per cent increase.
Economists polled by Reuters had forecast factory orders increasing 1.4 per cent in March. Orders rose 7.7 per cent on a year-on-year basis in March.
Orders for transportation equipment increased 7.6 per cent, lifted by a 44.5 per cent jump in the volatile orders for civilian aircraft. Transportation orders rose 8.9 per cent in February. Orders for machinery fell 1.9 percent, the largest drop since April 2016, after rising 0.6 per cent in February.
Orders for mining, oil field and gas field machinery surged 2.6 per cent. Orders for motor vehicles fell 1.0 per cent, the biggest drop since last July. Orders for electrical equipment, appliances and components rose 0.6 per cent while bookings for computers advanced 1.0 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 rising commodity prices after the Trump administration imposed tariffs on steel and aluminum imports are starting to impact production.
A survey on Monday showed sentiment among manufacturers falling in April for a second straight month amid growing concerns about the tariffs, which were imposed by President Donald Trump in March.
Manufacturers said the import duties had increased prices, made it difficult to source material and brought business planning to a standstill. That could undercut business spending on equipment.
Trump imposed 25 per cent tariffs on steel imports and 10 per cent for aluminum to shield domestic industries from what he has described as unfair competition from other countries.
The Commerce Department revised March orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, to show them falling 0.4 per cent instead of dipping 0.1 per cent as reported last month.
Orders for these so-called core capital goods rose 1.0 per cent in February. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, declined 0.8 per cent in March instead of the 0.7 per cent drop reported last month.
Core capital goods shipments were up 1.2 per cent in February.