US Factory Orders Decline Sharply after March’s Temporary Boost
Following a critically important surge in March fueled by companies rushing to place orders before new tariffs took effect, factory orders across the United States experienced a pronounced drop in April.
Data released by the Census Bureau indicates that new orders for manufactured goods decreased by 3.7 percent from the previous month, exceeding economists’ expectations. While Reuters analysts had forecasted a 3.1 percent fall and Dow Jones predicted a 3.3 percent reduction, the actual decline was steeper. Despite this monthly setback, factory orders remain 2 percent higher than they were one year ago.
From Expansion to Contraction: manufacturing’s Fluctuating Path
The April downturn sharply contrasts with March’s extraordinary 3.4 percent increase-the strongest monthly gain after five straight months of growth-highlighting ongoing instability within the manufacturing sector.
Accounting for roughly 10.2 percent of the US economy, manufacturing has been grappling with challenges intensified by aggressive tariff policies implemented under President Donald Trump’s governance. These tariffs aimed to boost government revenue and revive America’s industrial base; however, many experts contend that any short-term rebound is unlikely due to persistent labor shortages and entrenched structural issues within the industry.
Industries Most Impacted by Falling Orders
The transportation sector bore the brunt of April’s decline, with total orders plummeting 17.1 percent-largely driven by an alarming 51.5 percent drop in commercial aircraft demand.
Simultaneously occurring, demand for motor vehicles, parts, and trailers saw a modest decrease of 0.7 percent during this period.
Diverse Outcomes Across Manufacturing Segments
The electrical equipment and appliance manufacturing category contracted slightly by 0.3 percent; on the other hand, production related to computers and electronic products grew marginally at one percent.
machinery orders also edged up modestly with a growth rate of approximately 0.6 percent.
If transportation-related goods-which had propelled March’s surge-are excluded from analysis, other sectors collectively experienced another dip near half a percentage point (0.5%), continuing previous downward trends seen outside transportation industries.
Diminishing Business Investment reflected in Core Capital Goods Data
A critical gauge of business investment intentions-orders for nondefense capital goods excluding aircraft-fell more sharply than initially projected: down by 1.5% compared to last month’s forecasted decline of around 1.3% for April.
This category encompasses vital equipment purchases companies make when planning expansions or upgrades; shipments within this group also slipped slightly (by $1.8 billion or roughly 0 .1%).
Supply Chain Bottlenecks Continue Hindering Production Efficiency
A recent survey conducted by an institute specializing in supply management revealed that manufacturing activity contracted over three consecutive months through May while suppliers faced thier longest delivery times since mid-2021-a clear indication that ongoing supply chain disruptions are still impeding production efficiency nationwide.
