U.S. factory orders decline 2.5% in January, better than forecast

Posted Mar 5th 2008 1:12PM by Joseph Lazzaro
Filed under: Economic Data

U.S. factory orders fell for the first time in five months in January 2008, as the slowing U.S. economy compelled businesses to reduce spending, the U.S. Commerce Department announced Wednesday.

Factory orders fell 2.5% in January 2008, after a revised 2% increase in December 2007. Analysts surveyed by Bloomberg News had expected factory orders to decrease 2.6% in January 2008.

Excluding orders for transportation equipment, factory orders declined 0.4%.

Durable goods orders fell a revised 5.1%, compared with the prior estimate of a 5.3% decline. Core capital equipment orders fell 1.5%. Orders for non-durable goods rose 0.3%.

Inventories of manufactured durable goods increased 0.6%, and have risen in six of the last seven months. Unfilled orders for manufactured durable goods increased a revised 0.7%, and have increased in 32 of the last 33 months. Shipments increased 2%, following two consecutive monthly decreases.

Economic Analysis: Given the U.S. housing sector's doldrums -- the sector's worst slump in more than 20 years -- and the pull-back in U.S. consumer spending, many economists expect a drop in factory orders, along with an understandable preference by businesses to keep inventories as low as possible. Assuming other economic fundamentals remain the same or do not improve, factory orders are likely to remain weak at least through Q2 2008, and most likely well into Q3 2008.

Tags: durable goods, factory orders, inthenews, inventories, U.S. Commerce Department