US factory orders slump in April as spending on tariff anticipation fades | Business and Economy

Orders tumble by 3.7 percent after a rise in March when businesses increased purchases in anticipation of tariffs.

Orders from United States factories have tumbled in April after a surge in March when businesses had front-loaded purchases in anticipation of tariffs.

New orders for US manufactured goods dropped by 3.7 percent on a monthly basis, worse than economists had expected, according to Census Bureau data released on Tuesday.

Economists polled by the Reuters news agency expected a 3.1 percent drop. Dow Jones forecast a 3.3 percent drop. On an annual basis, however, factory orders rose by 2 percent.

 

April’s report is in sharp contrast to the 3.4 percent increase in March, which topped five straight months of increases.

Manufacturing, which accounts for 10.2 percent of the US economy, has been put under pressure by President Donald Trump’s aggressive tariffs. Trump sees the tariffs as a tool to raise revenue to offset his promised extension of tax cuts and to revive a long-declining industrial base, a feat that economists argued was impossible in the short term because of labour shortages and other structural issues.

Hardest hit sectors

Orders in the transportation sector fell 17.1 percent, led by a sharp drop in the commercial aircraft sector. Aircraft orders fell by 51.5 percent in April. Orders for motor vehicles, parts and trailers dropped 0.7 percent.

Electrical equipment, appliances and component manufacturing fell by 0.3 percent. But manufacturing for computers and other electronic products actually grew by 1 percent.

Machinery orders also rose 0.6 percent. Excluding transportation, which led the surge in March orders, orders fell 0.5 percent, matching March’s decline of non-transportation goods.

The government also reported that orders for nondefence capital goods excluding aircraft, a measure of business spending plans on equipment, decreased 1.5 percent in April rather than 1.3 percent as estimated last month.

Shipments of these so-called core capital goods fell by an unrevised 0.1 percent, or $1.8bn.

An Institute for Supply Management survey showed manufacturing contracted for a third straight month in May and suppliers took the longest time in nearly three years to deliver inputs to factories.