US Factory Orders Rise 0.2% in December, Interest Rates to Lower

Summary

  • The Census Bureau of the Commerce Department mentioned that factory orders went up by 0.2% after experiencing a 2.6% rebound in November.
  • The increase was on par with the predictions made by economists. On a yearly basis, in December, orders saw a rise of 0.8%.
  • However, the manufacturing sector, accounting for 10.3% of the economy, is being held back by high interest rates.
  • The Federal Reserve decided to maintain the status quo regarding interest rates on Wednesday.
  • The Institute for Supply Management’s manufacturing PMI showed signs of nearing the recovery zone in January.
  • Demand for civilian aircraft, motor vehicles, parts and trailers, primary metals, computers, electronic products, appliances, and components saw an upward trend.
  • Certain changes were witnessed: manufactured goods inventories edged up by 0.1%, and unfilled orders ticked up by 1.3% after witnessing the same increase in November.
  • Orders involving non-defense capital goods excluding aircraft, an index for business spending plans on equipment, saw a 0.2% spike rather than the 0.3% as was previously forecasted.

Details on Economic Performance

The Commerce Department’s Census Bureau stated on Friday that factory orders increased by 0.2% after recovering by 2.6% in the prior month. This growth was in sync with economists’ projections. As compared to the previous year, orders had risen 0.8% in the closing month of the year.

The Stance of Manufacturing

Manufacturing, contributing 10.3% to the economy, is being hampered by lofty interest rates. Nonetheless, future prospects seem encouraging.

The Federal Reserve’s Decision

The Federal Reserve opted not to modify interest rates this Wednesday. The Federal Reserve head, Jerome Powell, informed journalists that rates had reached their apex and are expected to descend in the upcoming months.

The Status of the Manufacturing Sector

The Institute for Supply Management’s manufacturing PMI is inching closer to the recovery phase this January.

Growth in Various Sectors

Orders for civilian aircraft rose by 0.4% in December, subsequent to a surge of 84.1% in November. Simultaneously, orders for motor vehicles, parts and trailers, saw a rise of 0.9%. The sectors of primary metals, computers, electronic products as well as electrical equipment, appliances and components also reported similar growth.

The Inventory and Shipping details

A standstill was observed in the shipments of manufactured goods. However, the inventory of goods manufactured showed a minor increase of 0.1%. Additionally, unfilled orders grew by 1.3%, mirroring the increase seen in November.

Government Report on Business Spending

The administration also noted that orders concerning non-defense capital goods, barring aircraft (an indicator of corporate investment plans on equipment), saw a 0.2% uptick rather than an estimated 0.3% last month. Shipments of these so-called core capital goods remained static in comparison to the previous expectation of a 0.1% rise.

The financial data presented above could influence the forex or trading market and might have potential impacts on various financial assets. An analytical review of these trends and events could help strategize investment plans and trading activities accordingly.

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