Orders to U.S. factories plunge on airplanes, computers
ORDERS PLACES WITH U.S. FACTORIES, including computer chips made by Santa Clara, Calif.-based Applied Materials Inc., fell in August by the most in three years.
BLOOMBERG FILE PHOTO/DAVID PAUL MORRIS
By Lorraine Woellert Bloomberg News
WASHINGTON - Orders placed with U.S. factories fell in August by the most in more than three years, signaling that slowdowns in business investment and exports restrained the economic expansion.
The 5.2 percent decrease in bookings was the biggest since January 2009 and followed a revised 2.6 percent increase in July, the Commerce Department said today in Washington. The median forecast of economists in a Bloomberg News survey called for a decline of 5.9 percent. Demand for durable goods dropped 13.2 percent, the same as reported last week, while shipments of non-durables, which includes such things as petroleum and chemicals and often reflect swings in price, climbed 2.2 percent.
Factories are feeling the effects of Europe’s debt crisis and a slowdown in China and other Asian markets. In the U.S., concerns about a fiscal cliff of tax increases and government spending cuts set for January also are putting the brakes on business investment, which has been a mainstay of the expansion.
“These data indicate that the recent softness in manufacturing activity and capital spending is likely to continue, at least for several more months,” Steven Wood, president of Insight Economics LLC in Danville, Calif., said in a note to clients.
Economists’ forecasts in the Bloomberg survey ranged from declines of 1.2 percent to 8 percent.
The number of Americans filing first-time claims for unemployment insurance payments rose last week, highlighting an uneven improvement in the labor market, figures from the Labor Department also showed today. Applications for jobless benefits increased 4,000 to 367,000 in the week ended Sept. 29. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. The prior week’s reading was the lowest in two months.
Stocks held earlier gains after the reports. The Standard & Poor’s 500 Index climbed 0.7 percent to 1,461.33 at 10:32 a.m. in New York as investors awaited tomorrow’s employment data for September.
The drop in factory orders was paced by a 101.8 percent plunge in demand for commercial aircraft, the same as reported last week, and a 3.4 percent drop in computers and electrical equipment, today’s Commerce Department report showed.
Excluding the volatile transportation category, factory orders increased 0.7 percent in August for a second month.