Factory Orders Signal Slowdown April Rebound Is Not Enough To Fan Inflationary Concerns

Orders to U.S. factories rebounded across a range of industries in April but not enough to put inflationary stress on the production pipeline.

The 1.2 percent increase in orders, to a seasonally adjusted $323.9 billion, was the third rise in four months and followed a 1.3 percent drop in March, the Commerce Department said Wednesday.

Analysts said the rebound didn’t contradict their expectation for only modest manufacturing growth in the April-June quarter after a robust first quarter.

‘The next few months will be slower,” said Priscilla Trumbull of the WEFA Group in Eddystone, Pa. “It could well be fairly flat.”

Shipments of manufactured goods also jumped 1.2 percent in April, the largest increase in a year. That helped produce the second consecutive decline in the backlog of unfilled orders - 0.3 percent in April, the same as in March.

At the same time, production was sufficient to raise inventories by 0.6 percent, the ninth increase in 10 months.

The April advance in new orders was broad-based and included a 1.3 percent increase for durable goods, big-ticket items expected to last three or more years. Orders for durable goods rose 1 percent, the first increase in three months.

Within durable goods, orders for transportation equipment - often a volatile sector - rose for the first time since January and included gains in aircraft and automobiles. Orders for industrial machinery increased for the fifth consecutive month. Primary metals such as steel and fabricated metal products posted strong gains.