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US manufacturing slows

31-05-2011
by 
in 

New orders for US manufactured goods posted their largest drop in six months in April after a steep fall in demand for transportation equipment, suggesting some cooling in factory activity.

Durable goods orders declined 3.6 per cent during April, worse than economists' expectations for a 2.2 per cent fall. March's orders were revised up to a 4.4 per cent rise from a 4.1 per cent increase, according to the US Commerce Department.

While durable goods orders are extremely volatile, the report added to a raft of recent data suggesting that the loss of economic growth momentum encountered as the year started persisted into the early part of the second quarter.

It also underscored the magnitude of the impact of supply chain disruptions from the Japanese earthquake on the economy.

"It is clear, not only from this report but from others, that the US economy is encountering its fair share of speed bumps," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

So far, data such as retail sales and industrial production have been generally lacklustre.

The weak durable goods report could prompt economists to lower their forecasts for second-quarter growth, currently ranging between 2.5 and 3.5 per cent.

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