New orders for U.S.-made goods fell more than expected in September and business spending on equipment was slightly weaker than initially thought, suggesting that manufacturing remains soft amid the ongoing U.S.-China trade war.
Factory goods orders declined 0.6 per cent after dipping by an unrevised 0.1 per cent in August, the Commerce Department said on Monday. Economists polled by Reuters had forecast factory orders would drop 0.5 per cent in September.
Factory orders fell 0.3 per cent compared to September 2018. Shipments of manufactured goods declined 0.2 per cent in September after decreasing 0.3 per cent in the prior month.
Pointing to underlying weakness in the sector, which accounts for about 11 per cent of the economy, unfilled orders at factories were unchanged after edging up 0.1 per cent in August. Inventories rose 0.3 per cent in September after dipping 0.1 per cent in August.
Manufacturing has been hobbled by a 16-month trade war between the United States and China, which has also caused a drop in business investment. U.S. and Chinese negotiators have been racing to finalize a text of a ‘phase one’ agreement between the world’s two largest economies.
A critical date is Dec. 15, when new U.S. tariffs on Chinese imports such as laptops, toys and electronics are set to kick in.
Transportation equipment orders dropped 2.8 per cent in September after increasing 0.2 per cent in August. Orders for civilian aircraft and parts dropped 11.8 per cent after declining 17.2 per cent in the prior month.
Orders for computers and electronic products fell 1.2 per cent but orders for electrical equipment, appliances and components rose 0.7 per cent. Machinery orders edged up 0.2 per cent in September after decreasing 0.3 per cent in August.
The Commerce Department also said September orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, dropped 0.6 per cent instead of the 0.5 per cent drop reported last month.
Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, declined 0.7 per cent in September, the same as previously reported. Business investment declined at its steepest pace in more than 3-1/2 years in the third quarter.