U.S. factory orders slipped in April, investment weak

Jun. 5, 2017 – Orders to U.S. factories fell in April for the first time in five months amid declining demand for heavy machinery, iron and steel, and commercial airplanes. A key category that tracks business investment was weak for a third month.

Factory orders edged down 0.2 per cent in April after a 1 per cent increase in March, the Commerce Department said Monday. It was the first decline since a 2.3 per cent drop last November.

A category that serves as a proxy for business investment posted a tiny 0.1 per cent gain. Orders in this closely watched category had been flat in March.

The weakness in April was expected to be temporary, given hopes that manufacturing has started to bounce back in recent months from a prolonged slump last year.

Orders for durable goods — items ranging from bicycles to battleships that are expected to last at least three years — dropped 0.8 per cent in April. Demand for nondurable goods, a category that covers such things as paper, chemicals and food, rose 0.4 per cent in April.

Orders for transportation equipment in April fell 1.4 per cent, as a 0.6 per cent rise in demand for motor vehicles was offset by a 9.1 per cent drop in orders for commercial aircraft, a volatile category.

Demand for machinery contracted 0.7 per cent, reflecting a 16 per cent plunge in demand for construction machinery. Orders for primary metals fell 0.7 per cent, with demand for iron and steel down 2 per cent.

Despite the April drop, American manufacturing has bounced back in recent months from a slump early last year. American manufacturing was hurt early last year and in late 2015 by cutbacks in the energy industry and a strong dollar that makes U.S. products pricier overseas.