Tags: Factory | Orders | Drop | April | May | 2010

Factory Orders Dropped 1.2% in April, Most Since May 2010

Thursday, 02 Jun 2011 10:31 AM

Orders placed with U.S. factories fell in April by the most in almost a year as demand for aircraft waned and Japan’s earthquake restrained auto-related supplies.

Bookings for manufacturers’ goods dropped 1.2 percent, the biggest decrease since May 2010, after a revised 3.8 percent gain in March, figures from the Commerce Department showed today in Washington.

Economists projected a 1 percent decline in April, according to the median forecast in a Bloomberg News survey. Orders for durable goods fell 3.6 percent.

A supply managers’ report yesterday showed the cooling in manufacturing extended into May, adding to evidence the economy is having difficulty gaining strength after a first-quarter slowdown. Orders for aircraft slumped in April, while auto makers, unable to secure parts from Japanese producers in wake of the earthquake a month earlier, curtailed output.

“The slowdown is more pronounced than people were thinking” for manufacturing, Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, said before the report. “Temporary factors, mostly the spike in energy prices earlier in the year and the Japan supply-chain issues, hit the economy harder than we previously thought.”

Estimates of the 67 economists surveyed by Bloomberg ranged from a decline of 3 percent to a gain of 1.5 percent.

Jobless claims decreased by 6,000 to 422,000 in the week ended May 28, according to Labor Department figures released today. Economists had predicted a drop to 417,000.

Orders for capital goods excluding aircraft and military equipment, a measure of future business investment, fell 2.3 percent, the most since January. March capital goods orders rose 5.4 percent.

Bookings for civilian aircraft slumped 30 percent in April, while orders motor vehicles and parts dropped 5.5 percent.

Capital Goods

Shipments of capital equipment, which are used in calculating gross domestic product, dropped 1.5 percent after a 3.7 percent increase in March.

Bookings for non-durable goods, including petroleum and chemicals, increased 0.6 percent, today’s report showed.

Factory inventories climbed 1.3 percent in April, and manufacturers had enough goods on hand to last 1.32 months at the current sales pace, up from 1.3 the prior month.

A recurring pattern of declines in equipment orders at the start of a quarter probably also helped depress the April figures, economists have said.

The supply-chain induced slowdown may abate in coming months as Japanese automakers like Honda Motor Co., Nissan Motor Co., and Toyota Motor Crop. work to restore output to normal following their country’s temblor.

Auto Production

Tokyo-based Honda said its North American and China vehicle production will return to pre-earthquake levels in August. In the U.S., production of Honda’s Civic small cars will continue to be slowed by limited supplies of some parts, the Tokyo-based company said in a statement May 26. Production of the 2012 Civic, which went on sale in April, will be at about 50 percent, it said.

“The light at the end of the tunnel is glowing brighter for us, represented by this significant improvement in our production situation,” John Mendel, executive vice president of U.S. sales, said in the statement.

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Orders placed with U.S. factories fell in April by the most in almost a year as demand for aircraft waned and Japan s earthquake restrained auto-related supplies.Bookings for manufacturers goods dropped 1.2 percent, the biggest decrease since May 2010, after a revised 3.8...
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