US factory orders drop again amid manufacturing slump

ReutersFILE PHOTO: Components are installed around the engine on the assembly line at the General Motors (GM) manufacturing plant in Spring Hill
  • New orders for American-made goods dropped in November, the latest sign that the manufacturing sector has struggled to climb out of the mild recession it fell into last year.
  • The Commerce Department said Tuesday factory goods orders fell 0.7%, in line with economist expectations and the third decline in four months.
  • A separate gauge of factory activity contracted for a fifth straight month at the end of 2019.
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New orders for American-made goods dropped in November, the latest sign that the manufacturing sector has struggled to climb out of the mild recession it fell into last year.

The Commerce Department said Tuesday factory goods orders fell 0.7%, in line with economist expectations and the third decline in four months.

The figure was pulled down by orders in the transportation sector, which declined more than 2% for civilian aircraft and by nearly three quarters for defence aircraft. That weakness was expected after Boeing suspended production of its 737 Max following two fatal crashes last year.

But other data has shown trade tensions have added to pressure on the US manufacturing sector, which was also expected to slow in the face of cooler growth abroad. A key gauge of factory activity contracted for a fifth straight month at the end of 2019.

The Institute for Supply Management said its manufacturing index fell in December to a low not seen since June 2009 as new orders and production both weakened sharply.

“Starting to see suppliers try to pass on costs associated with tariffs,” one respondent said in the December ISM survey. “Uncertainty on the trade front continues to keep agricultural markets on the defensive.”

A Federal Reserve study released last month showed that tariffs have hurt factory jobs through higher prices and retaliatory measures. An uncertain outlook for trade policy has also depressed business investment and hiring plans.

“We find that US manufacturing industries more exposed to tariff increases experience relative reductions in employment as a positive effect from import protection is offset by larger negative effects from rising input costs and retaliatory tariffs,” the study said.

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