- Lindsey Piegza, chief economist at Stifel Nicolaus & Co
New orders for US factory goods declined for a second consecutive month in September as the manufacturing sector continues to suffer from a strong US Dollar and dramatic spending cuts by energy companies. According to the Commerce Department, factory orders declined 1% in the reported month following a 2.1% decrease in August. A category that serves as a proxy for business investment spending slipped 0.1%. The September result was driven by a steep 36% fall in the volatile category of commercial aircraft. Yet, the weakness appeared to be widespread across other categories including primary metals, machinery and computers. Us manufacturers have been suffering this year as a strong Greenback makes American products less competitive overseas. The Dollar has gained 16.8% versus the currencies of the US main trading partners since June 2014, which has undermined export growth and weighed on the profits of multinationals.
The US economic growth slowed to a moderate 1.5% rate in the July-September quarter following a 3.9% expansion in the second quarter. Many economists are predicting GDP to accelerate to around 2.5% in the current October-December period, as strength in consumer spending offsets ongoing weakness in manufacturing.
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