Factory orders rebound in may, aboard shipments up (Reuters)

WASHINGTON (Reuters)-new orders received from factories bounced back in may, boosted by demand for transport and a range of other products, which points to the underlying strength in the manufacturing sector.

The Commerce Department said Tuesday the orders for manufactured goods rose 0.8 percent after the fall of 0.9 per cent in April. Economists had forecast factory orders rebounding 1.0 per cent in May.

Production is leading the economic recovery, with data on Friday, showing a pick-up in the industry as the Institute for Supply Management manufacturing rose to 53.5 from 55.3 in June in the month of May.

Details of the report may factory orders suggested an easing in supply chain disruptions after the earthquake of March in Japan that had hindered the activities of the factory.

The Commerce Department report showed orders excluding transportation with edged 0.2 percent in may after a similar gain in the previous month.

Orders to U.S. factories vacancies rose 0.9 percent in may, the biggest increase since September, after a gain of 0.6 per cent in April. Shipments edged 0.1 percent after falling 0.4 percent in April.

U.S. inventories at factories rose 0.8 percent in May to 593.0 billion, the highest level since the series began in 1992.

The Department revised durable goods orders for may show a larger increase of 2.1 percent, rather than the increase of 1.9 percent previously reported. Excluding transportation, durable goods orders were up 0.7 percent in the month of may instead of 0.6 percent.

Orders for non-capital goods excluding aircraft defense, seen as a measure of business confidence, the increase has been verified to 1.6 percent.

(Reporting by Lucia Mutikani, Editing by Chizu Nomiyama)

View the original article here

Read more »

Data factory strengths below (Reuters)

WASHINGTON (Reuters)-new orders for manufactured goods in the United States and a gauge of business plans for spending surged in may, easing fears of a sharp slowdown in factory activity.

Durable goods orders increased 1.9 percent after dropping the 2.7 per cent in April, the Commerce Department said on Friday, with a strongly rebounding business expenditures.

An improvement across the Board in May and revisions to April figures that showed smaller declines as reported earlier, highlighted the underlying force in a sector that has fueled the economic recovery.

Economists expected durable goods orders, a leading indicator of health, production of 1.5 percent rise in May. Durable goods are items ranging from toasters to aircraft that are intended for three years or more.

The report came as a relief to investors after recent data had shown regional factory some signs of fatigue.

Supply chain disruptions after the earthquake and tsunami of March in Japan were binding and production data on Friday suggested the impact of disasters may be waning.

The durable goods report also suggested that the economy was likely to regain the momentum that year.

"This supports our view that the economic ' soft patch ' not resist significantly in the second half," said Joseph LaVorgna, Chief U.S. economist at Deutsche Bank in New York.

"Also brings us to wonder if the recent, sharp declines in production of different calibers, such as the Empire of New York and Philly Fed survey, were a reaction to negative news in the neighborhood before."

The report better than expected, helped curb the losses on Wall Street, where stocks fell on concerns about the Italian banking sector and uncertainty over the passage of a Greek austerity plan.

The price for the debt of the Government of the United States were mostly higher, while the dollar climbed against a basket of major currencies.

GROWTH REVISED HIGHER TOUCH

Despite his role as leader, production only accounts for about 11.7 percent of U.S. gross domestic product and about 9 percent of total employment.

Obama administration and business leaders would like to once again become the main production of the u.s. economy, after losing out to emerging markets, where production costs are relatively low.

President Barack Obama on Friday launched an initiative to increase the production work by the Government in cooperation with companies and Universities to invest more than 500 million dollars in advanced technologies.

The economy grew at an annual rate of 1.9 per cent in the first quarter, the Department said in another report, up from a previously estimated 1.8 percent. That marked a sharp slowdown in the rate of 3.1 per cent in the fourth quarter.

The slowdown at the beginning of the year has lingered in the second quarter. The Federal Reserve on Wednesday cut its growth forecast for the U.S. economy both this year and next, while affirming the hope that some temporary restrictions would soon raise.

More clues about the health of the manufacturing sector will arrive next week in a series of regional surveys capped by Friday on national production data by the Institute for supply management.

Weak investigations by banks in New York and Philadelphia Federal Reserve raised the risk that the ISM index of national factory activity could contract in June after 22 months of expansion. Economists, however, are looking for a slowdown in activity, not a decline.

TRANSPORT ORDERS

Durable goods orders in May were a buoyed by 5.8 percent to bounce back in transport equipment, with the orders of a motor vehicle after immersion in 0.6 percent rise 5.3 percent in the previous month.

That suggested some improvements in the production of cars, which was hit by a shortage of parts from Japan.

Excluding transportation, durable goods orders rose 0.6 percent after falling a 0.4 per cent in April.

External transportation, orders for primary metals, machinery, equipment, electrical equipment and apparatus and computer and electronic products all rose.

Orders for non-defense capital goods excluding aircraft, a proxy for business spending closely guarded, rebounded to increase 1.6% last month, after the fall of a 0.8 per cent in April. Economists had expected an increase of 1.0 percent.

"Business continues to spend on new equipment, the only mystery is why you are adding to staff to run the machines that are buying," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Shipments of capital goods orders excluding aircraft self-defense, that go into calculating the product of GDP, increased 1.4 percent after falling 1.5 percent in April.

(Edited by Neil Stempleman)

View the original article here

Read more »

Data points to underlying factory strength (Reuters)

WASHINGTON (Reuters) – New orders for U.S. manufactured goods and a gauge of business spending plans rose in May, easing fears of a sharp slowdown in factory activity.

Durable goods orders increased 1.9 percent after dropping 2.7 percent in April, the Commerce Department said on Friday, with a proxy of business spending also rebounding strongly.

An improvement across the board in May and revisions to April's figures that showed smaller declines than previously reported, pointed to underlying strength in a sector that has powered the economic recovery.

Economists had expected durable goods orders, a leading indicator of manufacturing health, to rise 1.5 percent in May. Durable goods are items ranging from toasters to aircraft that are meant to last three years or more.

The report came as a relief to investors after recent regional factory data had shown some signs of fatigue.

Supply chain disruptions after the March earthquake and tsunami in Japan have been constraining production and Friday's data suggested the impact of the disasters might be waning.

The durable goods report also suggested the economy was likely to regain momentum later in the year.

"This supports our view that the economic 'soft patch' will not endure meaningfully into the second half," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.

"It also leads us to wonder whether the recent, sharp declines in various production gauges, such as the New York Empire and Philly Fed surveys, were a reaction to negative news earlier in the quarter."

The better-than-expected report helped to curb losses on Wall Street, where stocks fell on concerns about the Italian banking sector and uncertainty about passage of a Greek austerity plan.

Prices for U.S. government debt were mostly up, while the dollar rose against a basket of major currencies.

GROWTH REVISED A TOUCH HIGHER

Despite its leading role, manufacturing only accounts for about 11.7 percent of U.S. gross domestic product and roughly 9 percent of total employment.

Both the Obama Administration and business leaders would like manufacturing to once again become the mainstay of the U.S. economy, after losing out to emerging markets where production costs are relatively low.

President Barack Obama on Friday launched an initiative to boost manufacturing jobs by teaming government up with companies and universities to invest more than $500 million in advanced technologies.

The economy grew at an annual rate of 1.9 percent in the first quarter, the department said in another report, up from a previously estimated 1.8 percent. That marks a sharp slowdown from the 3.1 percent rate in the fourth quarter.

The slowdown at the start of the year has lingered into the second quarter. The Federal Reserve on Wednesday cut its forecasts for U.S. economy growth for both this year and next, while stating hope some temporary restraints would soon lift.

Further clues on the health of the manufacturing sector will come next week in a series of regional surveys capped by data on Friday on national manufacturing from the Institute for Supply Management.

The weak surveys from the New York and Philadelphia Federal Reserve banks have raised the risk the ISM's index of national factory activity could contract in June after 22 months of expansion. Economists, however, are looking for a slowing in activity, not a decline.

TRANSPORTATION ORDERS UP

Durable goods orders in May were a buoyed by 5.8 percent bounce back in transportation equipment, with motor vehicle orders rising 0.6 percent after plunging 5.3 percent the previous month.

That suggested some improvement in auto production, which has been hit by a shortage of parts from Japan.

Excluding transportation, durable goods orders increased 0.6 percent after a 0.4 percent fall in April.

Outside of transportation, orders for machinery, primary metals, capital goods, electrical equipment and appliances, and computers and electronic products all rose.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded to increase 1.6 percent last month after a 0.8 percent fall in April. Economists had expected a 1.0 percent increase.

"Business continues to spend on new equipment, the only mystery is why they are not adding to staff to run the machines they are buying," said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ in New York.

Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of GDP product, increased 1.4 percent after falling 1.5 percent in April.

(Editing by Neil Stempleman)

View the original article here

Read more »