Coronavirus Economy: US Factory Orders Post Biggest Decline In 3 Decades

The Commerce Department said Monday factory orders posted their steepest decline since 1992, when it started keeping the record, as coronavirus disrupted supply chains and demand began to plummet. Factory orders were down 10.3% from February to a seasonally adjusted $445.8 billion.

April estimates, which are expected to show an even steeper drop, are due March 28.

“This is going to be an extremely difficult first half for manufacturing,” Ryan Sweet, a senior director at Moody’s Analytics in West Chester, Pennsylvania, told Reuters. “The coronavirus has significantly disrupted global supply chains.”

Commerce reported last week the economy had contracted 4.8% in the first quarter with experts predicting as possible 30% contraction in the second quarter.

Factory output has tanked around the globe as coronavirus stay-at-home orders have forced manufacturing and business shutdowns.

The fall was the fourth in five months. February saw a 0.1% increase. Durable goods orders were off 14.7%, led by transportation equipment. Orders for planes, vehicles and oil field machinery all collapsed. Nondurable goods were off by 5.8%.

Shipments were down 5.2%, the third straight monthly decline, to $473.6 billion while unfilled orders fell 2%, reversing a three-month trend, to $1.13 billion. Inventories recorded the third straight month of decline, 0.8% to $693.5 billion.

Shipments of petroleum and coal products were off 30.3% amid spiraling energy prices.

The Institute for Supply Managements monthly report released Friday showed the April contraction in U.S. manufacturing recorded its sharpest pullback since the Great Recession, posting a reading of 41.5%. The index showed April inventories up 2.8%.

“The PMI indicates a level of manufacturing-sector contraction not seen since April 2009, with a strongly negative trajectory,” said Timothy R. Fiore, chairman of the Institute for Supply Management Manufacturing Business Survey Committee.

He added: “The coronavirus pandemic and global energy market weakness continue to impact all manufacturing sectors for the second straight month. Among the six big industry sectors, food, beverage & tobacco products remains the strongest. Transportation equipment and fabricated metal products are the weakest of the big six sectors.”