US factory orders miss expectations in May
Add BT as a preferred source
NEW orders for US made goods increased less than expected in May, as a surge in civilian aircraft orders was partially offset by sluggishness elsewhere amid higher interest rates that are eroding demand.
Factory orders rose 0.3 per cent after advancing by the same margin in April, the Commerce Department said on Wednesday (Jul 5). Economists polled by Reuters had forecast orders rising 0.8 per cent. Orders increased 1.1 per cent through May from a year earlier.
In addition to the higher interest rates, manufacturing, which accounts for 11.1 per cent of the economy, is being constrained by spending shifting to services from goods, typically bought on credit, as well as businesses carefully managing inventories in anticipation of weak demand.
The Institute for Supply Management’s manufacturing PMI dropped in June, marking the eighth straight month that the index stayed below the 50 threshold, which indicates contraction in manufacturing. That is the longest such stretch since the Great Recession.
Some pockets of strength remain, however, amid solid demand for goods like transportation equipment, machinery as well as electrical equipment, appliances and components.
Orders for transportation equipment increased 3.8 per cent in May after accelerating 4.8 per cent in the prior month. Civilian aircraft orders soared 32.8 per cent, but motor vehicle orders fell 0.6 per cent.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Orders for machinery surged 1.2 per cent, while bookings for computers and electronic products rose 0.3 per cent. Orders for electrical equipment, appliances and components rebounded 1.9 per cent.
Excluding transportation, orders fell 0.5 per cent. Shipments of manufactured goods rose 0.3 per cent. The inventory of manufactured goods at factories fell 0.2 per cent. Unfilled orders at factories increased 0.8 per cent.
The Commerce Department also reported that orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose by 0.7 per cent, unrevised from last month’s estimate.
Shipments of these so-called core capital goods increased 0.3 per cent. They were previously reported to have gained 0.2 per cent. Business spending on equipment has contracted for two straight quarters, the first back-to-back declines since mid-2020. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
