Mo­tor ve­hi­cles power U.S. fac­tory or­ders

National Post (National Edition) - - FINANCIAL POST - LU­CIA MUTIKANI

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.

CAR­LOS OSORIO / THE AS­SO­CI­ATED PRESS FILES

De­spite the second straight monthly gain in June, fac­tory or­ders for mo­tor ve­hi­cles re­mained well be­low their Fe­bru­ary level.

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