After a rough December, U.S. factoryordersmade a strong comeback in January, thanks mainly to an uptick in commercial aircraftpurchases.
Increased Factory Orders
Themanufacturingsector makes up just over 10% of the economy and has slowly been recovering from the impact of the Federal Reserve’s interest rate increases over the past two years.
According to theU.S. Census Bureau reportreleased on March 5, factory orders rose by 1.7%. This comes after a revised 0.6% decline in December, and marks a 3.5% year-over-year increase—quite a bit higher than the 1.6% economists had expected.
Aircraft Orders
The standout performer in January was civilianaircraft, with orders soaring by a massive 93.9% after a steep drop of 28.9% in December.
Also helping lift the month’s overall factory order figures were transportation equipment orders, which rebounded by 9.9%.
Challenges
Not all sectors saw gains, however, showing that some manufacturing areas are still struggling. For instance, orders for motor vehicles and parts fell by 1.5%.
Business spending on equipment contracted in the fourth quarter, following rapid growth in the summer months. Non-defense capital goods orders (not including aircraft) rose by 0.8%, but shipments of core capital goods decreased by 0.3%.
Uncertainty
With ongoing uncertainty surrounding tariffs and supply chain costs, businesses may be hesitant to ramp up investments too quickly.
A recent survey from theInstitute for Supply Managementreported growing concerns among manufacturers over how these new trade policies will impact costs and supply chains.
Image Credit: Shutterstock/Katrina Brown
