April factory orders were up, slightly, for third straight month
April factory orders were up, slightly, for third straight month
Factory orders for the month of April were released by the Commerce Department on Tuesday. The statistic tracks, basically, how much stuff the economy is asking manufacturers to make.
Orders were up 0.7% from the month before. That’s good, but not great. In fact, April was the third straight month of good-but-not-great growth in factory orders.
Another term for consistent good-but-not-great growth: resilience. The factory orders data contrasts with construction and consumer spending numbers, which came in below analysts’ expectations in the past week. So what’s going on?
Keep in mind that April’s modest uptick in factory orders follows a modest downturn late last year, said Mike Montgomery, senior analyst at S&P Global Market Intelligence.
“Which is, in combination, sort of going nowhere very slowly,” he said.
But there were some bright spots in Tuesday’s report. Demand for construction and industrial equipment was up about 2% from the month before.
Ned Hill, a professor of economic development at Ohio State University, said the federal government has something to do with that growth.
“It’s going to remain strong because of the industrial spending that’s triggered by the CHIPS Act and the other national industrial policies. It’s just starting to go into the ground,” he said.
In other words, we’ve got factories building factories — or at least making components that will go into semiconductor and battery production.
And when it comes to orders for consumer goods, “a surprise in there was the fact that looking year over year, household appliances is holding up pretty well,” Hill said.
But there is evidence in April’s data that a couple of years of elevated interest rates are slowing some production lines, said Matt Colyar, an economist with Moody’s.
“If you squint enough, you can see that there’s softening demand,” he said, mentioning new car sales. Still, Colyar added, as some other economic indicators cool off, manufacturers have held up “pretty admirably.”
If consumer spending stays sluggish, that will hurt manufacturers eventually. But for now, Colyar said, factories seem to be chugging along.
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