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First Cut: Double-digit declines in factory orders for April and March

New orders for all factory goods were down 13.0% in April from March. New orders for durables were down 17.7%. Orders decreased in most categories, but the depth of the decline in large part due to a 48.3% drop in transportation orders on weakness in motor vehicles and aircraft. Excluding transportation, durables were down 7.7%. Nondurables orders were down 9.0% in April with widespread falls in the dollar value of shipments. There was particular softness in prices at petroleum refineries with a steep 33.3% decrease as oil prices were in freefall and demand was far below normal.

While orders had been softer in recent months due to trade disputes and the problems at Boeing, the arrival of the COVID-19 pandemic and public health measures to combat its spread have greatly reduced demand for goods at home and abroad.

The data in the report is relatively old at this point and mostly confirms that the second quarter is off to a solidly recessionary start. Unfilled orders continued to decline in April and fell 1.6% with more cancellations in nondefense aircraft and general lack of any backlog after weak new orders in March. Shipments suffered from the lack of orders as well and were down an extraordinary 13.5% overall compared to March. Inventories were down 0.4% in April as nondurable goods were down 1.2%, although durables inventories were up 0.2%.

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