US factory orders rebound in December
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NEW orders for US-manufactured goods rebounded in December, but higher interest rates are weighing on business spending on equipment, which could keep manufacturing under pressure.
The Commerce Department said on Thursday (Feb 2) that factory orders increased 1.8 per cent after dropping 1.9 per cent in November. Economists polled by Reuters had forecast orders would rebound 2.2 per cent.
Orders increased 11.8 per cent on a year-on-year basis in December.
The Federal Reserve’s fastest cycle of interest rate hikes since the 1980s, aimed at fighting inflation, is undercutting demand for goods, which are mostly bought on credit.
The US dollar’s past appreciation against the currencies of the United States’ main trade partners and a softening in global demand are also hurting manufacturing. Spending is shifting back to services. The Institute for Supply Management said on Wednesday that its manufacturing PMI contracted for a third straight month in January.
The rebound in factory orders in December was driven by a 16.9 per cent jump in bookings for transportation equipment, which followed a 5.2 per cent drop in November. Transportation equipment orders were boosted by a 115.5 per cent surge in orders for civilian aircraft. Motor vehicle orders fell 0.7 per cent.
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There were decreases in orders for machinery as well as computers and electronic products. But orders for electrical equipment, appliances and components rose 1.1 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, dipped 0.1 per cent in December, instead of 0.2 per cent as reported last month.
Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, dropped 0.6 per cent instead of 0.4 per cent as previously reported. REUTERS
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