Orders decline by 3.7 percent following a rise in March, as businesses had stocked up in preparation for tariffs.
Orders from factories across the United States saw a significant decline in April after a spike in March when companies increased their orders in anticipation of tariffs.
According to data from the Census Bureau released on Tuesday, new orders for manufactured goods dropped by 3.7 percent compared to the previous month, which was a sharper decline than what economists had predicted.
Economists surveyed by Reuters had anticipated a 3.1 percent decrease, while Dow Jones projected a 3.3 percent drop. On a yearly basis, however, factory orders saw an increase of 2 percent.
The April report starkly contrasts with March’s 3.4 percent rise, which marked the end of five consecutive months of growth.
The manufacturing sector, representing 10.2 percent of the US economy, is facing challenges due to President Donald Trump’s strict tariffs. Trump views these tariffs as a means to generate revenue to support his proposed extension of tax cuts and to rejuvenate a dwindling industrial sector—an endeavor that many economists argue is not feasible in the short term due to labor shortages and other structural problems.
Most Affected Sectors
Orders in the transportation sector plummeted by 17.1 percent, primarily due to a significant decline in commercial aircraft orders, which fell by 51.5 percent in April. Additionally, orders for motor vehicles, parts, and trailers saw a decrease of 0.7 percent.
Manufacturing of electrical equipment, appliances, and components decreased by 0.3 percent. Conversely, production of computers and other electronic items actually grew by 1 percent.
Orders for machinery increased by 0.6 percent. Excluding the transportation sector, which had driven the increase in March, overall orders fell by 0.5 percent, aligning with March’s drop for non-transportation goods.
The government also revealed a 1.5 percent decline in orders for non-defense capital goods, excluding aircraft, which is a gauge of business spending on equipment. This was a larger decrease than the previously estimated 1.3 percent.
Shipments of these core capital goods experienced a slight decline of 0.1 percent, translating to a loss of $1.8 billion.
A survey from the Institute for Supply Management indicated that manufacturing continued to contract for the third consecutive month in May, with suppliers experiencing their slowest delivery times in nearly three years.
