Factory Orders Drifted Lower in April but Sustained Strong Year-Over-Year Gains

The Census Bureau said that new factory orders edged down 0.2 percent in April, pulling back slightly from March’s fastest pace since November 2014. Much of that decline stemmed largely from a decrease in nondefense aircraft orders, down 9.1 percent, which can often be quite volatile from month-to-month. Excluding transportation, manufactured goods orders were up 0.2 percent. Durable goods orders fell by 0.8 percent, or off by 0.5 percent with transportation equipment excluded. In contrast, nondurable goods orders were up by 0.4 percent. Nonetheless, new factory orders – which have struggled mightily over the past couple years – have largely trended in the right direction more recently, up 3.8 percent since April 2016. Excluding transportation, the gains were slightly larger, up 6.0 percent year-over-year.

Looking specifically at durable goods activity in April, the data were mixed but mostly lower. Demand was weaker for the month for electrical equipment and appliances (down 2.0 percent), fabricated metal products (down 1.0 percent), machinery (down 0.7 percent), primary metals (down 0.7 percent) and furniture and related products (down 0.2 percent). Those declines were more than enough to offset better sales data for computers and electronic products (up 1.6 percent) and motor vehicles and parts (up 0.6 percent), among others. Core capital goods – or nondefense capital goods excluding aircraft – were up 0.1 percent in April, with a gain of 3.0 percent over the past 12 months.

Meanwhile, shipments of manufactured goods were flat in April, improving from the decline of 0.2 percent in March. Despite drifting marginally lower since then, shipments in April ($470.8 billion) were not far from the level experienced in February ($471.6 billion), which was the highest since December 2014. On a year-over-year basis, factory shipments have risen 4.7 percent since April 2016, or 5.9 percent with transportation excluded.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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