February U.S. factory orders drop as businesses continue to cut investment

Posted Apr 2nd 2008 2:02PM by Joseph Lazzaro
Filed under: Bad News, Industry, Economic Data, Recession

U.S. factory orders declined 1.3% in February 2008, the U.S. Commerce Department announced Wednesday, as the nation's manufacturers and wholesalers continued to trim operations on slack demand stemming from the U.S. economic slowdown.

Economists surveyed by Bloomberg News had expected February 2008 factor orders to decline 0.6%. Factory orders declined by a revised 2.3% in January 2008. Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.

Also, in March 2008 shipments fell 2.1%, durable goods orders fell 1.1%, and new orders declined 1.1%.

Meanwhile, unfilled orders increased 0.9%, while inventories increased 0.5%. In addition, orders for primary metals, computers and electronic components, electrical equipment and transportation equipment increased.

Economic Analysis: The industrial sector -- a major component of U.S. commercial activity -- continues to show signs of contraction and weakness. Companies are moderating/reducing capital equipment spending, due to slack consumer and business-to-business demand. The U.S. Federal Reserve's interest rate reductions and the economic stimulus act passed by the U.S. Congress will inject considerable stimulus into the U.S. economy, but to date it has not shown up in the factory order statistics.

Tags: factory orders, inthenews, U.S. Commerce Department