Motor vehicles power U.S. factory orders
WASHINGTON for U.S.-made goods increased more than expected in June, suggesting the manufacturing sector was regaining its footing, though rising COVID-19 cases threaten the tentative recovery.
The Commerce Department said on Tuesday factory orders rose 6.2 per cent, boosted by a surge in demand for motor vehicles, after rebounding 7.7 per cent in May.
Despite the second straight monthly gain, orders remained well below their February level.
Economists polled by Reuters had forecast that orders advanced 5 per cent in June. Factory orders decreased 10.1 per cent in the month from a year earlier.
Manufacturing, which accounts for 11 per cent of U.S. economic activity, is recovering as businesses replenish inventories. The Institute for Supply Management reported on Monday that its measure of national factory activity accelerated to its highest level in nearly 11/2 years in July.
Many manufacturers, however, said demand was weak or slow, and that they were laying off workers. A significant improvement in both demand and factory activity is unlikely because of skyrocketing coronavirus cases, especially in the densely populated South and West regions where authorities in hard-hit areas are closing businesses again and pausing reopenings.
Timely data like weekly applications for unemployment benefits suggests that the economic recovery that started in May, with the reopening of businesses, was ebbing. Claims for jobless benefits have risen for two straight weeks. At least 30.2 million Americans were receiving unemployment cheques in July.
The economy suffered its biggest blow since the Great Depression in the second quarter, with gross domestic product shrinking at its steepest pace in at least 73 years. Unfilled orders at factories tumbled 1.4 per cent in June after being unchanged in May. Inventories increased 0.6 per cent, while shipments of manufactured goods surged 9.8 per cent.
Transportation equipment orders rose 20.2 per cent after soaring 78.8 per cent in the prior month. Orders for motor vehicles and parts accelerated 86.2 per cent. Machinery orders increased 3.0 per cent, and orders for electrical equipment, appliances and components rose 1.9 per cent.
The government also reported that orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, jumped 3.4 per cent in June instead of increasing 3.3 per cent as reported last month.
Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, increased 3.3 per cent in June, instead of rising 3.4 per cent as previously reported.
Despite the second straight monthly gain in June, factory orders for motor vehicles remained well below their February level.