Report: Factory orders plummet in February
The decline in orders reached unexpected levels, further hinting at an approaching recession.
Orders to U.S. factories fell for a second straight month, a worse-than-expected performance that reinforced worries that the risk of recession is rising, an Associated Press report said Wednesday.
The Commerce Department reported that factory orders dropped by 1.3% in February, about double the downturn that economists had been expecting. Orders had fallen an even bigger 2.3% in January, the largest decline in five months. The falloff in demand was widespread, with steep declines in orders for motor vehicles, various types of heavy machinery and demand for iron and steel.
Aaron Smith, an economist with Moody's Economy.com, noted that inventories of unsold manufacturing goods have now risen for six straight months, indicating further weakness ahead as factories are forced to cut production to prevent a sizable increase in unwanted stockpiles.
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The weakness in manufacturing occurred even though orders for commercial airplanes rose by 5.1% in February, rebounding from a big decline in January. Orders for motor vehicles fell by 2% in February after no gain in January. Automakers are struggling with weak demand in the face of soaring gasoline prices.
Overall, orders for transportation products posted a 1.8% rise in February as the strength in commercial and defense aircraft orders as well as higher demand for ships and boats offset the drop in motor vehicles. Orders for heavy machinery plunged by 12.3% in February, the biggest decline since January 2004, while orders for iron and steel fell by 2.3%.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey