US April factory orders rise less than forecast
Orders placed with American factories rose less than forecast in April, suggesting businesses may still be working inventories down before restocking.
By Agencies |
WASHINGTON: Orders placed with American factories rose less than forecast in April, suggesting businesses may still be working inventories down before restocking.
Bookings increased 0.3 per cent, following a 4.1 per cent gain in March, the commerce department said in Washington. Excluding transportation equipment, bookings rose 0.7 per cent after a 2.4 per cent gain in March. The report shows companies are still wary of building up stockpiles as the housing industry slumps. Even so, back-to-back increases in orders for capital goods suggest business spending and overseas demand may help the economy recover as predicted by the Federal Reserve, after growth in the first quarter was the slowest in four years.
Demand for capital goods “is very much a positive for business investment,” said Adam York, an economist at Wachovia in Charlotte, North Carolina, who is forecasting the economy will grow at an annual pace of slightly more than 3 per cent in the second quarter. “We’re definitely in the later phase of the inventory correction cycle.”
Inventories rose 0.5 per cent, the biggest gain since September, and have increased in 13 of the last 14 months, commerce department figures showed. After the report, the yield on the benchmark 10-year US treasury note fell 1 basis point to 4.94 per cent. Stocks and the dollar were little changed.
Factory orders were forecast to rise 0.7 per cent, according to the median estimate in a Bloomberg survey of 66 economists. Forecasts of the gain in orders ranged from 0.2 per cent to 2 per cent. Orders for durable goods, which make up about 55 per cent of factory demand, rose a revised 0.8 per cent after a 5.1 per cent increase in March. The government last week, in a preliminary estimate, reported a 0.6 per cent rise in durables orders for April.
Orders for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 2.1 per cent after a 4.6 per cent gain. The commerce department had previously estimated a 1.2 per cent gain. Shipments of these goods, part of the government’s calculation of gross domestic product, rose 1 per cent after rising 1.6 per cent.
Civilian aircraft orders fell 10.7 per cent after gaining 53.6 per cent in March.
Bookings for machinery fell 1.5 per cent after rising 5.4 per cent, Monday’s report said. Primary metals orders rose 3.9 per cent after rising 5.8 per cent.
Orders for computers and electronic products rose 1.8 per cent after falling 1.3 per cent. Bookings for automobiles fell 2.7 per cent after gaining 2.4 per cent.
Bookings for non-durable goods, including food, petroleum and chemicals, fell 0.2 per cent in April after rising 2.9 per cent in March. Orders of non-durable consumer goods, which includes apparel, food and beverages, fell 1 per cent after a 4 per cent gain.
Monday’s report showed businesses had enough goods to last 1.24 months at April’s sales pace, down from 1.25 months.
Other reports in recent weeks have shown strengthening in manufacturing, which accounts for 12 per cent of the economy. Orders for durable goods, which make up almost 60 per cent of factory orders, rose 0.6 per cent in April after a 5 per cent gain in March, the government reported on May 24.
The Institute for Supply Management’s manufacturing index rose in May to the highest in 13 months while its production index rose to the highest since February 2006, the Tempe, Arizona-based group reported on June 1. The inventory index showed continued liquidation of stockpiles.
“People are still liquidating inventories,” said Norbert Ore, chairman of the ISM survey, in a conference call from Atlanta. “It could be that we overshot the mark on inventories.”
The previous day, the National Association of Purchasing Management-Chicago reported that its business barometer rose more than forecast in May, while its production index rose to the highest in more than two years.
Spending on equipment and software rose at a 2 per cent annual rate in the first quarter, after a 4.8 per cent rate of decline in the final three months of 2006, the commerce department said last week. That was a bright spot in a report that showed first-quarter growth slowed to a 0.6 per cent pace.
Federal Reserve policy makers predict business spending will pick up as economic growth accelerates. Economists surveyed by Bloomberg forecast growth of 2.2 per cent in the second quarter and 2.5 per cent in the July-to-September period.
“The growth of business fixed investment seemed most likely to move higher in coming quarters, supported by strong corporate balance sheets and profits,” said minutes of the Fed’s May 9 meeting released last week.
Aircraft and car makers are profiting from demand from overseas and a dollar that has weakened by a fifth since early 2002.
General Motors plans to increase sales outside the US to more than 60 per cent of the company’s total, as its domestic sales decline.
GM expects to sell 9.2 million vehicles worldwide this year, company sales analyst Paul Ballew said a conference call from New York on May 4. That would be Detroit-based GM’s highest total since 9.55 million in 1978.
“We will do well over 5 million units this year outside the US market,” he said. “That will be an all-time record for us.” Last year, such sales totalled 4.2 million.
Bookings increased 0.3 per cent, following a 4.1 per cent gain in March, the commerce department said in Washington. Excluding transportation equipment, bookings rose 0.7 per cent after a 2.4 per cent gain in March. The report shows companies are still wary of building up stockpiles as the housing industry slumps. Even so, back-to-back increases in orders for capital goods suggest business spending and overseas demand may help the economy recover as predicted by the Federal Reserve, after growth in the first quarter was the slowest in four years.
Demand for capital goods “is very much a positive for business investment,” said Adam York, an economist at Wachovia in Charlotte, North Carolina, who is forecasting the economy will grow at an annual pace of slightly more than 3 per cent in the second quarter. “We’re definitely in the later phase of the inventory correction cycle.”
Inventories rose 0.5 per cent, the biggest gain since September, and have increased in 13 of the last 14 months, commerce department figures showed. After the report, the yield on the benchmark 10-year US treasury note fell 1 basis point to 4.94 per cent. Stocks and the dollar were little changed.
Factory orders were forecast to rise 0.7 per cent, according to the median estimate in a Bloomberg survey of 66 economists. Forecasts of the gain in orders ranged from 0.2 per cent to 2 per cent. Orders for durable goods, which make up about 55 per cent of factory demand, rose a revised 0.8 per cent after a 5.1 per cent increase in March. The government last week, in a preliminary estimate, reported a 0.6 per cent rise in durables orders for April.
Orders for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 2.1 per cent after a 4.6 per cent gain. The commerce department had previously estimated a 1.2 per cent gain. Shipments of these goods, part of the government’s calculation of gross domestic product, rose 1 per cent after rising 1.6 per cent.
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Civilian aircraft orders fell 10.7 per cent after gaining 53.6 per cent in March.
Bookings for machinery fell 1.5 per cent after rising 5.4 per cent, Monday’s report said. Primary metals orders rose 3.9 per cent after rising 5.8 per cent.
Orders for computers and electronic products rose 1.8 per cent after falling 1.3 per cent. Bookings for automobiles fell 2.7 per cent after gaining 2.4 per cent.
Bookings for non-durable goods, including food, petroleum and chemicals, fell 0.2 per cent in April after rising 2.9 per cent in March. Orders of non-durable consumer goods, which includes apparel, food and beverages, fell 1 per cent after a 4 per cent gain.
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Monday’s report showed businesses had enough goods to last 1.24 months at April’s sales pace, down from 1.25 months.
Other reports in recent weeks have shown strengthening in manufacturing, which accounts for 12 per cent of the economy. Orders for durable goods, which make up almost 60 per cent of factory orders, rose 0.6 per cent in April after a 5 per cent gain in March, the government reported on May 24.
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The Institute for Supply Management’s manufacturing index rose in May to the highest in 13 months while its production index rose to the highest since February 2006, the Tempe, Arizona-based group reported on June 1. The inventory index showed continued liquidation of stockpiles.
“People are still liquidating inventories,” said Norbert Ore, chairman of the ISM survey, in a conference call from Atlanta. “It could be that we overshot the mark on inventories.”
The previous day, the National Association of Purchasing Management-Chicago reported that its business barometer rose more than forecast in May, while its production index rose to the highest in more than two years.
Spending on equipment and software rose at a 2 per cent annual rate in the first quarter, after a 4.8 per cent rate of decline in the final three months of 2006, the commerce department said last week. That was a bright spot in a report that showed first-quarter growth slowed to a 0.6 per cent pace.
Federal Reserve policy makers predict business spending will pick up as economic growth accelerates. Economists surveyed by Bloomberg forecast growth of 2.2 per cent in the second quarter and 2.5 per cent in the July-to-September period.
“The growth of business fixed investment seemed most likely to move higher in coming quarters, supported by strong corporate balance sheets and profits,” said minutes of the Fed’s May 9 meeting released last week.
Aircraft and car makers are profiting from demand from overseas and a dollar that has weakened by a fifth since early 2002.
General Motors plans to increase sales outside the US to more than 60 per cent of the company’s total, as its domestic sales decline.
GM expects to sell 9.2 million vehicles worldwide this year, company sales analyst Paul Ballew said a conference call from New York on May 4. That would be Detroit-based GM’s highest total since 9.55 million in 1978.
“We will do well over 5 million units this year outside the US market,” he said. “That will be an all-time record for us.” Last year, such sales totalled 4.2 million.
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