Bookings for US factory goods down 1.7% in February
The demand for the US industrial products declined in February, signalling an additional slowdown in the country's economic growth. In addition, business expenditure on capital products was too fragile than predicted earlier. The gloomy numbers suggest a poor economic growth in the first quarter of 2016.
Fresh orders for the US industrial products dropped 1.7% in February, compared to an increase of 1.2% in January, according to the data from the Commerce Department. Orders have dropped 14 times in the 19 months. Orders for non-defence capital products eliminating aircraft sector declined sharply by 2.5% during the period, compared to a drop of 1.8% in January, as reported by Reuters.
According to Jesse Hurwitz, Barclays' economist, the data highlights a more volatility of the US manufacturing industry in the initial part of the first quarter. Currently, analysts predict gross domestic product growth rate to be below 1% for the first quarter of 2016. Prices of government bonds were slightly changed following the report, but the US dollar declined to a two-week low over the yen. Stocks were slightly lower during the trading session.
The factory sector has been burdened by a robust dollar and poor foreign demand, which hampered the nation's exports and dented the efforts to lower an inventory projection. Manufacturing has been impacted by low investments from energy sector as low oil price weakened their profits. Meanwhile, a survey suggested that factory activities in March increased for the first time since six months.
New contracts for transportation devices dropped 6.2% in February while bookings for machinery fell 3.4%. Moreover, orders for electrical appliances, components and devices declined 3.6% during the period. Exports of key capital products declined 1.7%, compared to 1.1% in January.
MercoPress said that in March, the US economy recruited 215K additional jobs, down from 242K in February. While the unemployment rate has increased from 4.9% to 5%, the Labour Department is confident about the country's economy as more US citizens were seeking jobs. Chris Williamson, head of economists team at Markit, said, "Another good month of hiring in the US will encourage further chatter in some corners of the Fed moving closer to hiking interest rates again."
Bookings for durable products like household and computer appliances fell 3% in February, while contracts for nondurable products like chemicals, paper products, and petroleum decreased 0.4%, compared to a drop of 1.9% in January. Orders for commercial airlines and oil field apparatus declined 27.2% and 20.1% respectively, according to abcNEWS.
The Institute for Supply Management said that factory index increased 51.8 in March, compared to 49.5 in the previous month. Market experts expect the US factory sector to stabilize in the near future, but the robust US dollar nails the country's exports, making the US goods less competitive in foreign markets.