- Michelle Girard, chief U.S. economist at RBS Securities
US factory orders plunged in April, adding to signs that manufacturers are struggling amid a stronger Greenback and cheaper oil. Orders dropped 0.4% in April, marking the eighth decrease in nine months, the Commerce Department reported. The key category that assesses business investment plans, non-military capital goods excluding aircraft, slid 0.3%. Orders for electronic products fell 4%, while demand in the volatile aircraft category tailed off steeply. Manufacturers have struggled in recent months due to global economic headwinds. The stronger Dollar has increased the cost of US-produced goods overseas, lowering sales in Europe and Asia. At the same time, cheaper oil prices have curbed demand from energy firms for pipelines and equipment. The spring rebound from a harsh winter that forced to shut down assembly lines has yet to blossom. Orders for durable goods declined 1% in April. Demand for non-durable goods, which include food and clothing, rose just 0.2%.
The ISM manufacturing index rose to 52.8 last month from 51.5 in April, the data showed earlier this week. The economy will likely rely on greater manufacturing sector output to recover after a soft start to 2015. During the first three months of the year, the economy shrank at an annual rate of 0.7%. Economists expect annualized growth to rebound to roughly 2% in the second quarter of this year.
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