US Manufacturing Pressured By Strong USD Fell in June
New orders for US factory goods fell for a 2nd month running in June on weak demand for transportation equipment and capital goods
The US Commerce Department said Thursday that new orders for manufactured goods declined 1.5% after a Southwardly revised 1.2% decrease in May.
The Department also said orders for non-defense capital goods excluding aircraft increased 0.4% in June instead of the 0.2% gainer reported last month. These core capital goods are seen as a measure of business confidence and spending plans on equipment.
Core capital goods shipments, which are used to calculate business equipment spending in the GDP report, fell 0.2% in June. They were previously reported to have slipped 0.4% in June.
Manufacturing accounts for about 12% of the economy, and it has been pressured by the residual effects of a strong USD and weak global demand, which have undermined exports of factory goods.
Manufacturing has also been hurt by businesses placing fewer orders as they try to clear the inventory glut.
The sector has also been hurt by spending cuts by energy firms as they adjust to reduced profits from cheaper Crude Oil.
An drop in inventories and sustained weakness in business spending weighed on economic growth in Q-2, with GDP rising at a anemic 1.2% annualized rate after increasing at a very weak 0.8% rate in Q-1 of Y 2016.
In June, orders for transportation equipment tumbled 10.5%, the biggest drop since August 2014. The largely reflected weak orders for aircraft.
Orders for motor vehicles and parts increased 3.2%, the largest gain since July 2015.
Orders for machinery, which have been hurt by weak demand in the energy and agricultural sectors, rose 0.2%.
Orders for electrical equipment, appliances and components gained 0.3%.
Orders for computers and electronic products slumped 1.9%, the largest drop in more than 12 months.
Inventories of factory goods dipped 0.1%. Inventories have declined in 13 of the last 14 months. Shipments increased 0.7%. That lowered the inventories-to-shipments ratio to 1.35 from 1.36 in May.
Unfilled orders at factories decreased 0.8% after 3 straight months of increases.
Thursday, the 3 US major stock market indexes finished at: DJIA -2.95 at 18352.05, NAS Comp +6.51 at 5166.25, S&P 500 +0.46at 2164.25
Volume: Trade was moderate with 796-M/shares exchanged on the NYSE
- Russell 2000 +6.6% YTD
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- DJIA +5.3% YTD
- NAS Comp +3.0% YTD
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