Fresh orders for U.S. manufactured goods plunged for the fifth consecutive month in December, though a smaller-than-expected decline in business spending estimates boosted speculation a rebound is in offing.
The Commerce Department announced that fresh orders for factory goods fell 3.4 percent after demand plunged in most industry sectors. The orders had declined by 1.7 percent in November. Economists surveyed by Reuters had expected the new orders to drop 2.2 percent.
Another report released on Tuesday showed stronger-than-forecasted sales in January by leading U.S. automakers, which is good news for a sector reeling from declining crude prices and slowdown in global markets.
“It suggests that activity will pick up in coming months,” Jennifer Lee, a Toronto-based senior economist at BMO Capital Markets, told Reuters.
The Commerce Department also reported that requisitions for non-defense capital goods minus aircraft, a key indicator of business spending plans and confidence, fell by 0.1 percent. This is much lower than the 0.6 percent decline announced in January.
U.S. manufacturing industry is weighed by slowdown in key markets such as Asia and Europe, besides declining crude prices and a more robust dollar. The falling oil prices have forced some energy firms to trim capital expenditure or delay launching such projects. Activity has also been hurt by labor unrest in the country’s West Coast ports, affecting shipments.
In the fourth quarter, businesses expenditure on equipment was the lowest since mid-2009, consequently dragging economic growth to 2.9 percent annually.
Unfilled factory orders fell 0.8 percent in December, the first time the orders had slid in 10 months, which is itself a sign of weakness. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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