U.S. Factory Orders Fall for First Time in Nine Months

July 2, 2010
Orders dropped by 1.4% in May, more steeply than expected

New orders for U.S. manufactured goods dropped in May following eight consecutive rises, and by far more than expected, government data showed on Friday.

Orders fell by $5.8 billion, or 1.4%, from April to $413.2 billion, the Commerce Department reported.

Though a decline was expected, it was sharply steeper than the 0.6% drop forecast by most analysts. Factory orders rose 1% in April.

Growth in the manufacturing sector, which has been leading the year-old U.S. recovery from recession, has recently shown signs of slowing, raising concerns about the recovery.

"May's factory orders report is in line with what more timely manufacturing reports have suggested -- the manufacturing expansion is intact, but settling into a slower rate of growth," said Michael Bratus at Moody's Economy.com. "The only new information in the report is the data on nondurable goods orders and shipments, which were dragged down by falling petroleum and other commodity prices."

Excluding transportation, which can be volatile on a monthly basis, factory orders fell for the second straight month, by 0.6% in May after 0.7% in April.

The May orders falloff was led by a 29.6% drop in civilian aircraft orders.

Orders for durable goods -- big-ticket items like cars, computers and planes -- fell 0.6%, the department said, revising downward its initial estimate of 1.1% last week.

The decline came after a 2.9% rise in April, the fifth month in a row of gains.

Nondurable goods orders tumbled 2.1% in May, accelerating a 0.6% decline from the prior month.

Copyright Agence France-Presse, 2010

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