NEW orders for US-manufactured goods fell more than expected in November amid a sharp decline in bookings for aircraft, while higher borrowing costs cooled demand for other goods.

The Commerce Department said on Friday (Jan 6) that factory orders dropped 1.8 per cent after gaining 0.4 per cent in October. Economists polled by Reuters had forecast orders falling 0.8 per cent. Orders increased 12.2 per cent on a year-on-year basis in November.

The Federal Reserve’s fastest interest rate-hiking cycle since the 1980s as it battles inflation is slowing demand for goods, which are typically bought on credit. Americans are also shifting spending away from goods to services as the nation moves to a post-pandemic era.

An Institute for Supply Management survey this week showed its measure of the nation’s factory activity contracted for a second straight month in December. Manufacturing accounts for 11.3 per cent of the US economy.

The plunge in factory orders was driven by a 6.3 per cent drop in bookings for transportation equipment, which followed a 1.9 per cent increase in October. Transportation equipment orders were weighed down by a 36.4 per cent tumble in orders for civilian aircraft.

Orders for defence aircraft fell 8.6 per cent. Motor vehicle orders rose 0.6 per cent. There were moderate gains in orders for machinery, computers and electronic products as well as electrical equipment, appliances and components.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

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 0.1 per cent in November, instead of gaining 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, fell 0.1 per cent as previously reported. REUTERS