U.S. Factory Orders Slump in April: 8th Decline in 9 Months

U.S. Factory Orders DeclineOn June 2, 2015, the U.S. Census Bureau reported on durable goods manufacturers’ shipments, inventories, and orders for the month of April. According to this data, factory orders have declined in eight of the last nine months. Data suggests that manufactures are struggling with the rising U.S. dollar and spending cuts in the oil and gas industry. (Source: U.S. Department of Commerce, June 2, 2015.)

New orders for U.S. manufactured durable goods unexpectedly fell in April as demand for transportation equipment and a range of other goods weakened. New orders decreased by $1.2 billion or 0.5% to $235.5 billion in April, compared to $240.2 billion in March. (Source: U.S. Department of Commerce, last accessed June 2, 2015.)

The headline figure will often exclude transportation and defense orders, as they can show higher volatility than the rest of the areas. However, transportation equipment, also down two of the last three months, led the decrease by $1.9 billion, or 2.4 %, to $77.9 billion.

Shipments of manufactured durable goods in April were down three of the last four months, seeing a decrease of $0.5 billion, or 0.2%, to $240.1 billion, down from the previously published 0.1% decrease. This followed a 1.5% March increase.

Inventories of manufactured durable goods in April increased by $0.8 billion, or 0.2%, to $401.6 billion. Inventories remained unchanged from the previous month; however, inventories have been rising for 24 of the last 25 months.

The U.S. durable goods report is an important measure of economic growth. The report focuses on big-ticket items that are purchased by businesses and consumers and are meant to last at least three years. It also provides an idea about business and consumer confidence.

The manufacturing sector has been struggling in the past months with the stronger dollar and global economic uncertainties. The strong dollar has increased the cost of U.S.-made products and services for foreigners. At the same time, cheaper oil prices have tumbled demand from energy firms for equipment.