Manufacturing Sector Shows Growth in New Orders

New orders for products made in the US increased in June

New orders for products made in the US increased in June, supported by strong demand for transport equipment and other goods, indicating some growth in the manufacturing sector, despite higher interest rates.

Factory orders rise 2.3% in June

The Commerce Department said on Thursday that factory orders rose 2.3% after rising 0.4% in May. Economists polled by Reuters had expected bookings to rise 2.2 percent. Orders rose 0.9% year on year in June.

Manufacturing sector resilient despite higher interest rates

The data shows that the manufacturing sector is still resilient despite the fact that the Federal Reserve has raised interest rates by 525 basis points since March 2022.

Manufacturing sector in recession

But opinion polls show that manufacturing, which accounts for 11.1% of the US economy, is in recession.

Manufacturing purchasing managers index declines

The US Institute of Supply Management said Tuesday that its manufacturing purchasing managers index declined for the ninth consecutive month in July, the longest since the 2007-2009 recession. Spending on durable goods has slowed since recovering during the COVID-19 pandemic, with services such as air travel and amusement park visits now favored.

Strength in certain sectors

But some elements of strength remain. Orders for transport equipment jumped 12% in June after rising 4.2% in the previous month. Orders for civil aircraft rose by 69.4%, while orders for cars rose by 0.9%.

Rise in orders for computers and electronic goods

Orders for computers and electronic goods rose by 1.6%. Orders for electrical equipment, appliances, and accessories rose 1.5%. However, orders for engineering fell by 0.2%.

Industrial shipments and backlogs

Shipments of industrial goods in June rose by 0.1%. Stocks of industrial goods have not changed. Backlogs at factories rose 1.8%, which should support production.