WASHINGTON: New orders for US-made goods accelerated in August, pointing to continued strength in manufacturing, even as economic growth slowed in the third quarter due to raw material and labor shortages.
The Commerce Department said on Monday that factory orders rose 1.2 percent in August. As previously reported, the July figures were revised to show orders rose 0.7 percent in July instead of a 0.4 percent increase. Economists polled by Reuters had forecast a 1.0 percent increase in factory orders.
Orders grew by 18.0 percent on a year-on-year basis.
Manufacturing, which accounts for 12 per cent of the economy, is being driven by a still strong demand for goods despite a return to services. Businesses are rebuilding inventory, which was depleted in the first half, reducing activity at factories.
A survey by the Institute for Supply Management last week showed manufacturing activity expanding steadily in September, but noted that “companies and suppliers continue to deal with an unprecedented number of hurdles to meet growing demand.”
According to the survey all industries were affected by “record-long raw material lead times, continued shortages of critical materials, rising commodity prices and difficulties in transporting products.”
Input shortages and resulting higher prices, worsened by the latest wave of COVID-19 infections, driven by the delta variant, potentially led to a sharp slowdown in GDP growth in the third quarter.
Data from last Friday showed high inflation sharply cutting consumer spending in July, with a moderate rebound in August. The Atlanta Federal Reserve is forecasting brakes on third-quarter GDP growth at a 2.3 percent annualized rate. The economy grew at 6.7 per cent in the second quarter.
The increase in orders for factory goods in August was led by computer and electronic products, fabricated metal products, transportation equipment as well as electrical equipment, instruments and components. But orders for machinery and primary metals declined.
The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are viewed as a measure of business spending plans on equipment, rose 0.6 percent in August instead of carrying forward the 0.5 percent reported last month. Raised.
Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the GDP report, rose 0.8 percent. Core capital goods shipments were earlier reported to grow 0.7 percent in August.
Appliances business spending was strong in the second quarter, reflecting double-digit growth for the fourth consecutive quarter. This contributed to the rise in GDP levels from their peak in the fourth quarter of 2019.
Lucia Mutikani. By
This News Originally From – The Epoch Times