Washington – New orders for U.S.-made goods plunged in April and business spending plans on equipment were much weaker than initially thought, suggesting business investment remained depressed early in the second quarter amid the COVID-19 pandemic.
The Commerce Department said on Wednesday factory orders dropped 13.0 per cent after falling 11.0 per cent in March. Economists polled by Reuters had forecast factory orders diving 14 per cent in April.
Factory orders fell 8.0 per cent year-on-year in April. But the slump in manufacturing, which accounts for 11 per cent of U.S. economic activity, probably is close to bottoming.
The Institute for Supply Management reported on Monday that its measure of national factory activity eased from an 11-year low in May.
The sector remains hobbled by supply chain disruptions following business closures around the globe to slow the spread of COVID-19. Social distancing measures at factories as they reopen are also hurting production.
Cheaper crude oil, which has eroded profits in the energy sector, is also weighing on manufacturers of drilling equipment.
Unfilled orders at factories dropped 1.6 per cent in April after falling 2.1 per cent in March. Inventories at factories slipped 0.4 per cent in April, while shipments of manufactured goods plummeted 13.5 per cent
Transportation equipment orders collapsed 48.3 per cent in April after plunging 43.2 per cent in the prior month.
There were no civilian aircraft orders, while bookings for motor vehicles and parts tumbled 29.3 per cent Machinery orders fell 7.2 per cent in April.
Orders for electrical equipment, appliances and components declined 9.0 per cent.
The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, declined 6.1 per cent in April instead of falling 5.8 per cent as reported last month.
Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, fell 5.7 per cent in April, instead of decreasing 5.4 per cent as previously reported.
Business investment has contracted for four straight quarters. .
(Reuters/NAN)
