US factory orders fell 1% in September
Orders for factory goods in the US dropped for the second consecutive month in September as manufacturers continue to face the effects of a strong US dollar and weakening global demand.
According to the latest data released by the Commerce Department, US factory orders fell 1% in September after a 2.1% downwardly revised drop in August.
The drop was led by a 36% plunge in the volatile category of commercial aircraft. Other categories that were weak include primary metals, computers, and machinery.
An economist at Barclays in New York, Jesse Hurwitz, was quoted by Reuters as saying:
“This morning’s report provides little new signal on the state of U.S. manufacturing. Demand for many categories of manufactured goods continues to struggle from the effect of a stronger dollar, weak foreign demand and lower energy prices,”
Demand for all durable goods declined 1.2%, while demand for nondurable goods (such as paper, chemicals and food) dropped 0.8%.
Manufacturers in the US have been hit by a strong dollar – making products made in the US more expensive overseas. Since June 2014 the dollar has gained 16.8 percent against the currencies of the country’s main trading partners.
In addition, key markets such as China have cut exports.
On a positive note orders for motor vehicles and parts climbed up 1.5 percent in September after a 2.0 percent drop in August. Automobile sales surged 13.6 percent in October from the previous year – at an annual rate of 18.24 million units, according to Autodata Corp. In September sales increase to a 18.17 million-unit rate.
In the July-September quarter US GDP slowed to a rate of 1.5%, down from a 3.9% increase in the second quarter. However, economists forecast GDP to rise to a rate of 2.5% in the fourth quarter on strong consumer spending during the holiday season.