In August, factory orders increased by 1.2 percent.
August orders for capital goods were revised marginally higher.
In New Jersey new orders for manufactured products increased in August, indicating continued industrial resilience even as economic growth slowed in the third quarter due to raw material and labor constraints. This is because when factories had financial difficulties they used loan alternatives in New Jersey.
According to the Commerce Department, industrial orders grew 1.2 percent in August. July data has been updated to show an increase of 0.7 percent. Reuters surveyed economists who forecasted a 1.0 percent increase in manufacturing orders. Orders increased 18.0 percent year over year.
“Manufacturing orders continue to rise, which is a positive indicator,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “However, manufacturing continues to be put to the test by global supply-chain problems.”
Shortages weighed on manufacturing products shipments, which only increased by 0.1 percent in August after rising by 1.5 percent in July.
Manufacturing, which accounts for 13% of the GDP, is being boosted by persistently high demand for products despite a shift in spending to services. Businesses are replenishing their inventory after a depleted first half.
According to a poll released last week by the Institute for Supply Management, industrial activity expanded gradually in September, but “businesses and suppliers continue to face an unprecedented number of barriers to meeting growing demand.”
According to the report, all sectors have been hit by “record-long lead times for raw materials, continuing shortages of crucial goods, increasing commodity costs, and transportation issues.”
Wall Street stocks were trading lower. The dollar decreased in value relative to a basket of currencies. Treasury yields in the United States increased.
SLIGHTLY SLOWER GDP GROWTH
Input shortages and accompanying high pricing, exacerbated by the newest wave of COVID-19 infections caused by the Delta variant, undoubtedly contributed to the third quarter’s severe slowdown in gross domestic product growth.
Last Friday’s data revealed that rising inflation significantly reduced consumer expenditure in July, followed by a modest comeback in August. According to the Atlanta Federal Reserve, GDP growth would slow to a 2.3 percent annualized pace in the third quarter. The economy expanded at a 6.7 percent annual rate in the second quarter.
Computers and electronic items, fabricated metal products, transportation equipment, electrical equipment, appliances, and components saw a rise in manufactured goods orders in August. However, charges for equipment and critical metals decreased.
With exports hardly increasing, factory inventories rose 0.6 percent in August, after a similar increase in July. Unfilled orders at factories increased by 1.0 percent in August, after a 0.5 percent increase in July.
Additionally, the Commerce Department stated that orders for non-defense capital goods, excluding airplanes, which are a proxy for company spending intentions on equipment, increased 0.6 percent in August, up from 0.5 percent in July. However, momentum has stalled in recent months.
Shipments of these so-called core capital goods increased by 0.8 percent, used to compute business equipment expenditure in the GDP report. Previously, August core capital goods shipments were reported to have grown by 0.7 percent.
The second quarter saw significant business equipment expenditure, marking the fourth consecutive quarter of double-digit increase. This helped propel GDP far over its fourth-quarter 2019 record.
“Taking data from the factory goods report and other relevant indicators into account, we continue to think that real equipment expenditure declined considerably in the third quarter and that real change in company inventories was near to zero,” said Daniel Silver, an economist at JPMorgan in New York.