WASHINGTON – US factory orders fell 0.5% during August, the third drop in the past four months, the Commerce Department said today. Outside of transportation, however, orders increased 0.9% – the first increase since March.
In August, demand for commercial aircraft and motor vehicles declined, while bookings were up for computers and various types of electronics equipment. Strong overseas demand for US manufactured goods has helped to offset sluggish domestic consumer spending.
Overall orders were up 0.4% in July. Transportation orders fell 10.2% in August, reflecting a 40.2% drop in demand for commercial aircraft, and orders for motor vehicles and parts dropped 3.6%.
The 0.9% rise in orders excluding transportation was the first increase since a 3.8% jump in March. Orders excluding transportation had fallen 0.9% in July after declines of 0.6% in June, 1.2% in May, and 0.7% in April.
Various readings in August have allayed concerns about a new recession. Economists, however, believe economic growth will remain weak, with the gross domestic product expected to expand 2% in the second half, up only slightly from 1.7% during the June quarter.
The slow growth will not be enough to make a significant dent in the unemployment rate, which stood at 9.6% in August and is expected to creep up to 9.7% in September.
Orders for durable goods fell 1.5% in July, while demand for nondurable goods rose 0.3% after a 0.1% drop in July.
TEMPE, AZ – Economic activity in the manufacturing sector expanded in September for the 14th consecutive month, says the Institute for Supply Management. However, the PMI fell 1.9 percentage points to 54.4%.
A reading above 50% indicates the manufacturing economy is generally expanding. However, the ISM went so far to point out that despite the positive PMI, many of the trend lines appear weaker. The PMI has fallen 11.5 percentage points from its January peak of 65.9%.
New orders dropped 2 points to 51.1%, while production fell 3.4 points to 56.5%. Inventories grew to 55.6%, up 4.2 percentage points. Customer inventories dropped 1 point to 42.5%. Backlogs fell 5 points to 46.5%.
The overall economy grew for the 17th consecutive month, says ISM.
“While the headline number shows relative strength this month, as the PMI reading of 54.4% is still quite positive, the overall picture is less encouraging,” said ISM spokesman Norbert J. Ore. “The growth of new orders continued to slow, as the index is down significantly from its cyclical high. Production is currently growing at a faster rate than new orders, but it typically lags and would be expected to weaken further in the fourth quarter. Manufacturing has enjoyed a stronger recovery than other sectors of the economy, but it appears that weaker growth is the expectation for the fourth quarter. Both the inventories and backlog of orders indexes are sending strong negative signals of weakening performance in the sector.”
EL SEGUNDO, CA -- Saying consumer demand is slowing and inventories are rising, research firm iSuppli lowered its 2010 semiconductor revenue forecast to 32%, down from its previous outlook of 35.1%.
SAN JOSE – North America-based semiconductor equipment manufacturers posted a 90-day rolling average of $1.82 billion in orders in August, up nearly 200% from last year.
