U.S. Factory Orders Rose More Than Forecast in March
Orders to U.S. factories rose more than forecast in March, indicating rising demand from overseas may be helping American manufacturers weather a decline in sales at home.
The 1.4 percent jump followed a 0.9 percent decline in February, the Commerce Department said today in Washington. Excluding orders for transportation equipment, which tend to be volatile, demand rose 2.2 percent, the most in a year.
Manufacturing is treading water as the weak dollar makes American goods cheaper overseas, helping to counter faltering demand from U.S. consumers and businesses. The Federal Reserve this week lowered rates for a seventh time since September and indicated it was ready to take a breather to gauge their effect.
“The cross currents of a weak domestic economy and a strong export sector continue to keep activity from faltering sharply,'' said Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York.
Economists surveyed by Bloomberg News forecast orders would rise 0.2 percent, according to the median forecast of 59 estimates, from a previously reported 1.3 percent drop in February. Projections ranged from a decline of 1.3 percent to a gain of 1 percent.
Earlier today, the Labor Department reported that payrolls fell by a smaller than forecast 20,000 in April and the jobless rate unexpectedly dropped. The figures indicated the U.S. slowdown may not have gathered pace at the start of the second quarter.
ISM Index
A survey by the Institute for Supply Management yesterday indicated factory orders may have fallen last month. The group's April orders index held for a second month at its lowest level since October 2001. Manufacturing overall contracted less than forecast as exports improved and inventories shrank at a slower pace.
So far, manufacturing has done better than in past downturns. While the ISM's factory index has been falling, it's still well above the 42.1 reading reached in February 2001, a month before the start of the 2001 recession.
Growing overseas demand is preventing manufacturing from sinking more. The U.S. trade deficit shrank in the first quarter to the lowest level in more than five years on record exports, Commerce reported this week payday loan cash advance loan.
Orders for durable goods, which comprise about half of factory orders, rose 0.1 percent in March, led by a 6.4 percent jump in machinery, Commerce said.
Oil Prices
Orders for non-durable goods such as garments, grains and petroleum products, jumped 2.6 percent, partly driven by higher prices for commodities. Crude oil traded on the New York Mercantile Exchange averaged $105.42 a barrel in March, compared with an average $95.35 a barrel in February.
Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 1 percent. Shipments of those items, used in calculating gross domestic product, increased 1.1 percent after a 1.7 percent decline.
Orders excluding defense equipment increased 1.4 percent. Orders for military gear dropped 5.5 percent.
Bookings for transportation equipment decreased 3.2 percent, led by a drop in demand for ships and boats. Aircraft bookings rose 6.6 percent. Demand for automobiles increased 1.4 percent.
General Motors Corp. and Ford Motor Co., the two biggest U.S.-based automakers, have announced production cutbacks as sales weaken. GM sold 16 percent fewer cars and light trucks last month compared with April 2007 and sales at Ford dropped 12 percent.
Auto Sales
“The U.S. is slumping,'' Carlos Ghosn, chief executive officer of Nissan Motor Co. Ltd, told reporters yesterday in Portugal. “At best, in 2009 and 2010 we'll see a stabilization.''
Total sales at manufacturers increased 1.1 percent in March, following a 1.9 decline the prior month, Commerce said.
The number of goods on hand was unchanged at 1.27 months' supply at the current sales pace.
Government reports have shown the slowdown in manufacturing isn't deepening. Industrial output rose 0.3 percent in March following a 0.7 percent decline in February, according to Fed data.
The U.S. economy grew at a 0.6 percent pace in the first three months of 2008, matching the prior quarter's pace, the government reported this week.
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