Factory Orders Up 2.7% in April; Best Since December
Orders to factories for manufactured goods rose in April for the second straight month in the biggest increase since December, the Commerce Department reported Wednesday.
The strong 2.7% gain in April followed a 0.7% hike in March and 1.2% and 2% declines in January and February. Orders had soared 4.7% in December.
Total orders registered $239.4 billion on a seasonally adjusted basis in April.
Robert Brusca, an economist with Nikko Securities Co. International in New York, compared the factory orders report to the index of leading economic indicators, which the Commerce Department also released Wednesday.
Factory orders were “absolutely surprising,” he said, while the indicators showed a 0.8% increase after falling for two months.
“It means,” he said, “the porridge is not too hot, not too cold and it isn’t just right. We’re just vacillating . . . I think.”
Bruce Steinberg of Merrill Lynch Capital Markets in New York said the orders report “means that in April the economy picked up from a depressed level in March.”
Lacks Momentum
“And yet . . . orders were not higher in April than in December,” Steinberg said. “So although the industrial sector of the economy is still advancing, it doesn’t have anywhere the kind of momentum it had in 1988.”
The Commerce Department said both durable and non-durable orders rose in April, with durables up 3% to $129.2 billion. It said all major industries except fabricated metals participated in the increase.
Electrical machinery orders were up 9.3% to $20 billion; primary metals such as steel rose 6% to $12.6 billion, and transportation equipment advanced 1.4% to $37.6 billion. The highly volatile transportation segment was up 11% in March and down 7.6% in February.
Orders for non-durable goods jumped 2.4% to $110.2 billion, the department reported. Nearly half the increase was in the petroleum refining industry.
The overall increase would have been higher except for a 15.8% drop in defense orders, which are subject to wide swings depending on when big contracts are signed.
Excluding defense, orders rose 3.6% after falling 0.3% in March and 2.7% in February.
