Rebounding from a weak March performance, the Commerce Department said Wednesday that orders to U.S. factories rose 1 percent in April. (Photo: Employees at the Mikawaya factory inspect a broken piece of machinery at the Vernon, Calif. facility.)
Orders to U.S. factories rose modestly in April as manufacturers rebounded from a weak March performance.
Factory orders rose 1 percent in April compared with March when orders had dropped a sharp 4.7 percent, the Commerce Department said Wednesday. The big swing reflected volatility in commercial aircraft orders, which were down sharply in March but surged 53.3 percent in April.
In a hopeful sign, orders in a category viewed as a proxy for business investment spending posted a moderate 1.2 percent rise following a 1.1 percent gain in March. This category had fallen 4.8 percent in February.
More spending by businesses could ease fears that manufacturing will be a drag on the economy later this year.
April's increase pushed orders to $474 billion, 1.7 percent higher than a year ago.
Orders for long-lasting goods ranging from computers to battleships rose 3.5 percent in April compared with March following a 5.9 percent decline in March. Orders for nondurable products such as paper, chemicals and food fell 1 percent in April after a 3.5 percent March decline. The decline in nondurable products primarily reflected falling energy prices.
In the durable goods area, orders for transportation products were up 8.4 percent, reflecting gains not only in demand for commercial aircraft but also motor vehicles and cars and defense aircraft. Excluding transportation, orders would have edged down a tiny 0.1 percent in April, a better showing than March when orders excluding transportation fell 2.8 percent.
Factories had been seeing fewer orders at the start of the year, in part because slower global growth had reduced demand for U.S. exports. Economists had also worried that across-the-board federal spending cuts and higher taxes might prompt businesses to cut back on orders.
Manufacturing output dropped 0.4 percent last month as auto companies cranked out fewer cars, factories made fewer consumer goods and most other industries reduced output.
And a measure of manufacturing activity fell in May to its weakest level since June 2009, the last month of the Great Recession.
The overall economy grew at an annual rate of 2.4 percent in the January-March quarter. But economists say growth is slowing to around a 2 percent rate in the current April-June quarter.
One bright spot for the economy has been the American consumer, who has shown surprising resilience this year despite paying higher Social Security taxes.
Consumer spending rose from January through March at the fastest pace in more than two years. Auto sales have been rising over the past year with consumers buying 1.4 million cars in May, up 8 percent from the sales pace a year ago.
A better job market and a sustained recovery in housing have helped soften some of the impact of the tax increase. Since November, employers have added an average 208,000 jobs a month. That's up from just 138,000 jobs a month during the previous six months.