Tags: Factory | Orders | us | economy

Factory Orders Post Unexpected Drop on Weak Demand

Monday, 04 Jun 2012 10:14 AM

Companies placed fewer orders to U.S. factories for the second straight month and a key measure that tracks business investment plans fell, adding to evidence that the economy is weakening.

The Commerce Department said Monday that orders for factory goods fell 0.6 percent in April from March.

Demand for so-called core capital goods, such as heavy machinery and computers, dropped 2.1 percent in April. That followed a 2.3 percent decline in March.

Core capital goods are a good proxy for business investment plans. The declines suggest companies may be worried about a weaker U.S. job market, which could crimp consumer spending. They may also fear the worsening European debt crisis and slower growth in China could slow demand for U.S. exports.

Even with the declines, factory orders are well above their recession lows. Orders in April totaled $465.98 billion, up 38.7 percent from the recession low reached in March 2009. Orders are still 3.1 percent below the peak reached in December 2007, the month the recession began.

On Friday, the government said U.S. employers added only 69,000 jobs in May, the fewest in a year and the third straight of subpar hiring. The unemployment rate rose from 8.1 percent in April to 8.2 percent last month.

Factory activity grew more slowly in May, according to the Institute for Supply Management's closely watched survey. Still, the private survey said new orders, an indication of future activity, rose to a 13-month high. That suggests growth could pick up in the coming month.

Manufacturing has been a leading source of growth and jobs since the recession ended. Economists believe that trend will continue.

Factories were one of the few industries to create jobs in May. They added 12,000 jobs, helped by rising demand for U.S. exports and a boom in car sales.

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2012-14-04
Monday, 04 Jun 2012 10:14 AM
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