Factory Orders Increase Some As Manufacturing Slide Slows
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Thursday, June 4, 2009
Factory orders inched upward in April after posting a decline the previous month, according to new economic data, offering further evidence that the U.S. manufacturing sector is no longer shrinking as rapidly as it was in the fall.
Analysts have been watching factory orders and other indicators for signs that manufacturers and their customers, having slashed inventories, will soon have to start replenishing their supplies. The new data, released yesterday by the Commerce Department, was encouraging -- factory orders rose 0.7 percent. But many economists fear that demand for factory goods could still be weighed down by the slump in the auto industry and construction, as well as in consumer spending.
Data released earlier this week showed that manufacturing shrank again in May but at a slower pace than in previous months. The Institute for Supply Management's index of business activity rose more than expected, and new orders increased for the first time in more than a year.
Outside of the manufacturing sector, the picture for the U.S. economy is more mixed. Construction, agriculture, retail and other non-manufacturing industries contracted for the eighth-straight month in May, albeit at a slightly slower pace than in recent months, according to a key index compiled by the Institute for Supply Management. That index, which is based on a survey of 400 firms in 60 sectors, rose to 44 percent from 43.7 percent in March. Any reading below 50 indicates contraction.
Six industries reported growth in May: real estate; rental and leasing; arts and entertainment; retail construction; utilities; and accommodations and food services.
In a separate report yesterday, payroll services firm ADP said private employers cut 532,000 jobs in May, fewer than analysts had been expecting. Medium and small businesses were responsible for most of the job cuts. The ADP report is seen by economists as a preview of the Labor Department's monthly unemployment report, which will be released tomorrow.
