June 5 (Reuters) – New orders for US-made goods rose for a second straight month in April, boosted largely by defense spending, but manufacturing as a whole continued to struggle under the weight of higher interest rates.
Factory orders rose 0.4% after a 0.6% gain in March, the Commerce Department said Monday. Economists polled by Reuters had predicted orders would rise 0.8%. Orders through April were up 1.4% from a year earlier.
The sector, which accounts for 11.3% of the economy, is being dragged down by the Federal Reserve’s fastest rate hike since the 1980s.
Banks have also tightened lending following the recent bankruptcy of three US banks, as spending shifts from goods, mostly bought on credit, to services.
Businesses are cutting back on restocking in anticipation of weaker demand later this year. The Institute for Supply Management said last week that the manufacturing PMI contracted for a seventh consecutive month in May.
Transportation equipment orders rose 3.7% on top of a 9.8% increase in March. Civil aircraft orders fell 8.5% after rising 96% in the previous month. Motor vehicle orders were up 0.5%. Excluding transportation, orders fell 0.2% for the third straight month and to the lowest level since February 2022.
Orders for machines rose 1.0%, but bookings for computers and electronic products fell 1.4%. Orders for electrical appliances, appliances and components fell 1.7%.
Shipments of manufactured goods fell 0.4%. Inventory of manufactured goods in factories rose 0.5%. Unfulfilled orders at factories increased 0.8%.
The Commerce Department also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business equipment spending plans, rose 1.3% in April, up from 1.4% as reported last month.
Shipments of these so-called core capital goods, which are used to calculate business equipment expenses in the Gross Domestic Product report, rose 0.5%, unchanged from what was previously reported. Business spending on equipment has contracted for two quarters in a row.
Reporting by Dan Burns; Edited by Chizu Nomiyama and Paul Simao