Climb in Factory Orders Taken in Stride

WASHINGTON — Orders to U.S. factories rebounded across a range of industries in April but not enough to put inflationary stress on the production pipeline, the government reported Thursday.

The 1.2% increase in orders, to a seasonally adjusted $323.9 billion, was the third rise in four months and followed a 1.3% drop in March, the Commerce Department said.

Analysts said the rebound didn’t contradict their expectation for only modest manufacturing growth in the April-June quarter after a robust first quarter.

“The next few months will be slower,” said Priscilla Trumbull of the WEFA Group in Eddystone, Pa. “It could well be fairly flat.”

Also Thursday, the nation’s largest stores reported lower-than-expected sales for May, the second straight month that the thermometer iced demand for apparel and other seasonal items.

“The weather was 4 degrees below normal for the month of May, and that just translated into lower sales for many retailers,” said Jeffrey Feiner, a retail analyst at Salomon Bros. Inc.

If the warmer weather doesn’t come soon, analysts warned, retailers could face lower second-quarter earnings.

May’s performance extended a losing streak for many retailers whose sales have lagged for months. Despite record levels of consumer confidence, many shoppers remain cautious with their spending.

Hardest hit last month were big clothing sellers such as Gap Inc. and Limited Inc. Also troubled were some discounters and moderately priced department stores, such as Sears, Roebuck & Co. and Kmart Corp., which reported slow sales of appliances, garden equipment and other big-ticket items.

Even Wal-Mart Stores Inc., the nation’s largest retailer, reported sales slightly below analysts’ estimates for the month.

U.S. financial markets rose after the economic reports were released, with the Dow Jones industrial average gaining 36 points. The price of U.S. Treasury bonds were little changed ahead of today’s employment report.

Separately, the Labor Department reported Thursday that the number of American workers filing first-time claims for jobless benefits unexpectedly shot up by 19,000 to 337,000 last week to the highest level in a month.

Economists said the report on factory orders suggested factories were more than able to keep up with the flow of orders.

Shipments of manufactured goods also jumped 1.2% in April, the largest increase in a year. That helped produce the second consecutive decline in the backlog of unfilled orders--0.3% in April, the same as in March.