HomeBusiness/EconomyAmerican Manufacturing Orders Decrease As Demand For Civilian Aircraft Plummets

American Manufacturing Orders Decrease As Demand For Civilian Aircraft Plummets

A decline in commercial aircraft bookings contributed to a decline in new orders for American-made goods in January, but gains in orders for machinery and a number of other products offered hope that the manufacturing sector might be on the mend.
Shipments of manufactured products increased after two consecutive monthly declines, according to the Commerce Department’s report released on Monday, while inventories were steady.

It came after a study conducted by the Institute for Supply Management last week that revealed manufacturing, which makes up 11.3% of the economy, declined for the fourth consecutive month in February, albeit the rate of fall moderated and new orders increased from a more than 2-1/2-year low.

After rising 1.7% in December, factory orders fell 1.6%. Reuters’ survey of economists predicted a 1.8% decline in orders. In January, orders increased 4.3% over the same month last year.

A quick improvement in manufacturing is, however, unlikely given that the Federal Reserve is predicted to keep raising interest rates through the summer. The dollar’s recent advances against the currencies of the United States’ main trading partners and a waning worldwide demand are further factors harming manufacturing.

The reduction in factory orders in January was mostly caused by a 13.3% dip in transportation equipment after a 15.8% increase in December. A 54.5% decline in orders for civilian aircraft weighed on orders for transportation equipment. Orders for vehicles went up 1.3%.

While bookings for computers and electronic products increased 0.6%, orders for machinery increased 1.6%. Electrical appliances, equipment, and component orders increased 1.3%. Also, there were increases in orders for defense aircraft, fabricated metal goods, and primary metals.

After declining 0.6% in December, shipments of manufactured products rose 0.7%, the largest increase since August. After increasing 0.4% in December, the stock of manufactured goods in factories remained constant. While that is encouraging for manufacturing in the future, it might hurt the nation’s gross domestic product this quarter.

As a rise in incomplete work for computers and associated products was countered by falls in consumer goods, the number of unfulfilled orders at factories remained steady.

The Commerce Department also stated that orders for non-defense capital goods, excluding aircraft, which are seen to be a sign of company equipment spending intentions, increased by 0.8% in January as compared to December.
As previously stated, shipments of these so-called core capital goods, which are used to determine business equipment investment in the GDP report, grew 1.1%.

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