U.S. Factory Orders Decline in November

WASHINGTON (Reuters) – New orders for U.S.-manufactured goods fell in November amid weakness in demand for commercial aircraft, while business spending on equipment appeared to have slowed in the fourth quarter, government data showed on Monday.

Factory orders dropped 0.4% after an upwardly revised 0.5% gain in October, the Commerce Department’s Census Bureau reported. Economists polled by Reuters had forecast a 0.3% decline after a previously reported 0.2% rise in October. Factory orders edged up 0.1% year-on-year in November.

Manufacturing, which accounts for 10.3% of the economy, has struggled in the aftermath of the Federal Reserve’s aggressive monetary policy tightening in 2022 and 2023 to curb inflation.

A recovery is likely this year as the U.S. central bank cuts interest rates, underscored by an Institute for Supply Management survey last week showing its Purchasing Managers Index rising to a nine-month high in December. Factory production rebounded after contracting for months, the survey revealed.

A pledge by President-elect Donald Trump’s incoming administration to cut taxes could provide a boost, but other policy promises, including higher tariffs on imported goods, could raise prices of raw materials. Trump denied a newspaper report stating his aides were exploring tariff plans that would cover only critical imports.

Stocks on Wall Street traded higher, the dollar slipped against a basket of currencies, and U.S. Treasury yields rose.

Orders for commercial aircraft and parts declined 7.0% in November after rebounding 16.4% in October. Boeing has struggled with a range of production issues, including a strike that halted production of its best-selling 737 MAX and safety concerns with the 767 and 777 wide-body planes.

There were also decreases in orders for computers, electronic products, and fabricated metal products. However, orders for machinery and primary metals, as well as electrical equipment, appliances, and components, rose.

Shipments of manufactured goods nudged up 0.1%, while inventories increased 0.3%. Unfilled orders rose 0.3%.

The government also reported that orders for non-defense capital goods excluding aircraft, viewed as a measure of business spending plans on equipment, increased 0.4% in November. These were revised down from a previously reported 0.7% rise. Shipments of core capital goods advanced 0.3%, instead of 0.5% as previously estimated.

Non-defense capital goods orders decreased 0.9%, rather than the 0.6% initially reported, while shipments dropped 0.9% instead of the previously estimated 0.8%.

Weak shipments suggest softer business investment in equipment in the fourth quarter following two strong growth quarters. The Atlanta Fed forecasts gross domestic product rising at a 2.4% annualized rate in the fourth quarter, following a 3.1% pace in the July-September quarter.