U.S. factory orders rebound on strong demand for aircraft

Tue Aug 4, 2015 12:53pm EDT
 
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By Lucia Mutikani

WASHINGTON (Reuters) - New orders for U.S. factory goods rebounded strongly in June on robust demand for transportation equipment and other goods, a hopeful sign for the struggling manufacturing sector.

The Commerce Department said on Tuesday new orders for manufactured goods increased 1.8 percent after declining 1.1 percent in May.

"We are moving past the very weak period for the manufacturing sector from early on this year, but that activity has yet to meaningfully increase," said Daniel Silver, an economist at JPMorgan in New York.

Factory activity has been stymied by a strong dollar and spending cuts in the energy sector after last year's sharp plunge in crude oil prices. Tepid global demand also has weighed on manufacturing, which accounts for about 12 percent of the domestic economy.

Those factors have eroded the profits of multinational companies like Caterpillar Inc (CAT.N: Quote), Procter & Gamble Co (PG.N: Quote), the world's largest household products maker, and Whirlpool Corp (WHR.N: Quote), the global home appliances giant.

Though there are signs that the energy spending drag is easing, the dollar's strength will likely remain a constraint. The dollar has gained 15 percent against the currencies of the United States' main trading partners since June 2014.

Stocks on Wall Street were little changed, while prices for U.S. government debt fell. The dollar was largely flat against a basket of currencies.

Orders for transportation equipment surged 9.3 percent in June, reflecting a 65.4 percent jump in aircraft bookings.   Continued...

 
Aircraft technicians and support staff work at Sikorsky Global Helicopters in Coatesville, Pennsylvania October 16, 2014. REUTERS/Mark Makela