Tags: US | Factory | Orders

Factory Orders Fall After Nine Months of Gains

Friday, 02 Jul 2010 10:31 AM

 

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Orders to U.S. factories declined broadly in May after nine straight months of gains, raising new concerns that the recovery is stalling.

The Commerce Department said Friday that orders for manufactured goods decreased 1.4 percent in May. It was the biggest drop since March 2009.

Excluding the volatile transportation sector, orders fell 0.6 percent. That number fell 0.7 percent in April, the worst showing in 13 months. Overall orders in April grew a revised 1.0 percent.

Orders for big-ticket durable goods were down 0.3 percent, after a 2.0 percent increase in April. Electronics and commercial aircraft were among the weakest performers.

Demand for those goods expected to last less than three months fell 2.1 percent. Lower gas prices were partly to blame. But there were significant losses for makers of clothing, drinks and tobacco, and chemical products.

The overall decline in orders was bleaker than the 0.5 percent drop expected by economists surveyed by Thomson Reuters.

The factory orders report followed a disappointing jobs report released earlier Friday. Employers cut 125,000 jobs, the most since October, the Labor Department said. That was dragged down by the loss of 225,000 temporary census jobs. Businesses added a net total of 83,000 jobs, better than May but not enough to speed the recovery.

Manufacturing has been a rare bright spot, helping lead the country out of recession with increased hiring and productivity.

However, economists fear joblessness and less demand for exports could sap the sector's strength in the coming months.

Some analysts pointed to strong spending by businesses as an indication that manufacturing will keep its momentum. Non-defense capital spending excluding aircraft was revised higher to a healthy 3.9 percent, indicating that many businesses expect the economy to keep growing.

"This amounts to an indication of continuing business confidence at least into May, since a confidence breakdown would surely hit capital goods demand quickly," said Pierre Ellis of Decision Economics.

"The issue going forward will be whether that confidence is sustained, given the troubled financial backdrop, and the apparent sputtering in consumer income growth," he wrote in a research note.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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