The strength of inflation pressures still gripping the U.S. economy was on display in the Commerce Department’s report Tuesday that orders for U.S. manufactured goods rose a sharp 2.2 percent in April.
The jump in orders was much higher than expected. Economists had forecast a one percent rise.
The big move shows that the appetite of U.S. consumers for goods has not waned. Factory orders have risen in 22 of the past 23 months. Household spending veered violently away from services towards goods in the early weeks of the pandemic and have not yet rebalanced to the prepandemic pattern. While some service spending has recovered, such as dining out, others still lag far behind. Gym membership, for example, remains low while purchases of home fitness equipment remain high.
The factory order figures are not adjusted for inflation and many observers think the big jump in the April number was driven in large part by rising prices.
Durable-goods orders were revised from a 0.8 percent gain to a 1.1 percent gain in March. The Producer Price Index for final demand durable goods, which measures what merchants and producers are paid for durable goods, rose one percent in March. That would indicate that almost all of the March gain was due to rising prices.
Orders for non-durable goods rose 3.2 percent in the month. This was likely boosted by the rise in energy and food prices. The Producer Price Index for energy rose 5.7 percent and food prices rose 2.4 percent. A category called “finished consumer foods, crude” jumped an astonishing 13.5 percent.
A metric considered a stand-in of business investment, orders for non-defense capital goods excluding aircraft, was revised up three-tenths of a percentage point to show a 1.3 percent in March
COMMENTS
Please let us know if you're having issues with commenting.