US factory orders fall more than expected in January
NEW orders for US-manufactured goods dropped more than expected in January, pulled down by a sharp decline in bookings for commercial aircraft, but demand for computers and electronic products accelerated.
Factory orders fell 3.6 per cent after slipping 0.3 per cent in December, the Commerce Department’s Census Bureau said on Tuesday (Mar 5). Economists polled by Reuters had forecast orders declining 2.9 per cent. They decreased 1.6 per cent year-on-year in January.
But there are signs that manufacturing, which accounts for 10.3 per cent of the US economy, is on the cusp of recovery after production eased in 2023 amid 525 basis points worth of interest rate hikes from the US central bank since March 2022. A survey from the Institute for Supply Management last week showed manufacturers more upbeat about the outlook.
Commercial aircraft orders plunged 58.9 per cent in January after rising 1 per cent in December. Boeing reported on its website that it had received only three orders for commercial aircraft in January, sharply down from 371 in December.
The planemaker is under pressure after a cabin panel blew out on an Alaska Airlines jet mid-air in early January. The Federal Aviation Administration has barred Boeing from expanding production of its best-selling 737 MAX narrowbody planes to improve quality control.
Orders for motor vehicle bodies, parts and trailers rose 0.7 per cent. Overall transportation orders tumbled 16.2 per cent after falling 0.6 per cent in December. But orders for computers and electronic products shot up 1.3 per cent. Electrical equipment, appliances, and components orders increased 0.9 per cent.
Orders for machinery slipped 0.3 per cent. There were also declines in orders for primary metals and fabricated metal products.
Shipments of manufactured goods fell 1 per cent, while inventories dipped 0.1 per cent. Unfilled orders at factories rose 0.2 per cent after advancing 1.3 per cent in the prior month.
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, were unchanged in January instead of gaining 0.1 per cent as estimated last month.
Shipments of these so-called core capital goods increased 0.9 per cent instead of 0.8 per cent as previously reported.
Nondefence capital goods orders plummeted 19.5 per cent instead of 19.4 per cent as initially estimated. Shipments of these goods dropped 3 per cent as reported last week. These shipments go into the calculation of the business spending on equipment component in the gross domestic product report. Business spending on equipment has contracted for two straight months. REUTERS
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