U.S. Factories Fell for the 2nd Straight Month in May a Worrisome Sign for American Industry

U.S. Factories Fell for the 2nd Straight Month in May a Worrisome Sign for American Industry

WASHINGTON — Orders to U.S. factories fell for the second straight month in May, a potentially worrisome sign for American industry. The Commerce Departments reported Wednesday that factory orders declined 0.8% in May, the biggest drop since last November. They fell 0.3% in April.

Economists had expected factory orders to drop again in May — but the fall was twice what they’d forecast.

Excluding the volatile transportation sector, factory orders fell 0.3% in May. Orders for civilian aircraft plunged 11.6% after dropping 12.2% in April. Computer orders slid 2.1%.

Orders rose a modest 0.2% in a category — capital goods excluding aircraft and military equipment — that is closely monitored for signs of businesses’ investment plans.
American manufacturing has been sending mixed signals.

The Federal Reserve reported last month that factory orders fell 0.4% in May, reversing a sharp increase in April. The Institute for Supply Management reported Monday that its manufacturing index rose last month to the highest level since August 2014.

U.S. factories have rebounded from a slump in late 2015 and early 2016 caused by cutbacks in the energy industry and a strong dollar that made American products costlier overseas.

But overall economic growth has been lackluster. The U.S. economy expanded at a 1.4% annual pace from January through March. Consumer spending on long-lasting durable goods dropped at a 1.6% annual pace in the first quarter, the weakest showing since the second quarter of 2011.

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