U.S. factory orders rebound strongly in May

New orders for U.S.-made goods rebounded sharply in May, while business spending on equipment remained solid, despite bottlenecks in the supply chain.

The Commerce Department said on Friday that factory orders surged 1.7% in May after slipping 0.1% in April. Economists polled by Reuters had forecast factory orders rebounding 1.6%. Orders increased 17.2% on a year-on-year basis.

Manufacturing accounts for 11.9% of the U.S. economy. Massive fiscal stimulus boosted demand for long-lasting manufactured goods during the COVID-19 pandemic, with millions of American working from home and learning remotely.

Factories are struggling to keep up as the pandemic fractured supply chains and disrupted the global shipping industry. The Institute for Supply Management reported on Thursday that manufacturing activity grew moderately in June.

Factory goods orders in June were boosted by a 7.7% surge in orders for transportation equipment. Orders for electrical equipment, appliances and components rose 1.3%.

Unfilled orders at factories rose 0.8% after gaining 0.4% in April. The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, edged up 0.1% in May instead of dipping 0.1% as reported last month.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 1.1%, upwardly revised from the 0.9% rise estimated last month.
Source: Reuters (Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)