Factory Orders Down Sharply in April

WASHINGTON – New orders received by U.S. factories slumped sharply in April, hit by weaker demand for a range of costly items from new cars and computers to primary metals used by the nation's floundering manufacturing sector, a Commerce Department report on Tuesday showed.

The value of factory orders plunged 3 percent to a seasonally adjusted $336.94 billion in April, the first decline since January. This followed a downwardly revised 0.7 percent gain in March.

The report highlighted the extent to which a U.S. economic slowdown is centered in manufacturing industries, which have shed tens of thousands of workers over the past year or more.

April's order falloff was even steeper than the 2.8 percent drop forecast by Wall Street economists and implied a soft start to second-quarter economic performance as output declines in the face of weak demand.

The U.S. economy crept ahead at a lackluster 1.3 percent annual rate in the first quarter this year -- well below its so-called potential rate of three to four percent -- and apparently faces continued weakness in the April-June second quarter.

The Federal Reserve has cut interest rates five times so far this year, citing among other concerns its worry that corporations pinched for profits will cut investment spending, which has been vital to the current record 10-year-long economic expansion.

Earlier on Tuesday, the Labor Department reported U.S. worker productivity fell at an annual rate of 1.2 percent in the first quarter -- the worst performance in eight years -- after a 2 percent gain in the final quarter of last year.

That report showed productivity, or output per worker, was pulled down by weakness in the manufacturing sector.

New orders for transportation equipment -- the largest single category of factory-made products -- fell 9.6 percent to $52.57 billion in April after rising 17.4 percent in March. There was less demand for everything from new cars to aircraft and ships.

Orders for computers and electronic equipment decreased 10.3 percent in April to $36.17 billion after being down 4.6 percent in March, reflecting fewer purchases by companies in high-tech products that are used for boosting productivity.

Within that category of products, orders for semiconductors tumbled 34.8 percent to $5.31 billion in April on top of a 9.4 percent drop in March.

Orders for nondurable products like clothing and paper products also weakened in April, falling 0.5 percent to $152.6 billion after a 0.8 percent decline in March.

Shipments of finished products, a barometer of current levels of activity on the factory floor, fell sharply by 2.5 percent to $338.95 billion in April after a 0.1 percent decrease in March.