Factory orders post first drop in five months

WASHINGTON, June 5 (Reuters) - New orders for U.S.-made goods fell in April for the first time in five months and orders for capital equipment were not as weak as previously reported, suggesting the manufacturing sector remained on a moderate growth path.

FILE PHOTO: People walk past a rack of SUV doors on a cart, at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. REUTERS/Mike Stone

Factory goods orders dropped 0.2 percent, the Commerce Department said on Monday after an upwardly revised 1.0 percent increase in March. Economists polled by Reuters had forecast factory orders falling 0.2 percent in April after a previously reported 0.5 percent increase in March.

Factory orders were up 4.4 percent from a year ago.

Manufacturing, which accounts for about 12 percent of the U.S. economy, is being supported by a recovery in the energy sector that has led to demand for oil and gas drilling equipment.

But a slowdown in motor vehicle sales could hurt production in the coming months. The government reported on Friday that employment at motor vehicles and parts manufacturers fell by 1,500 jobs in May.

A manufacturing survey last week showed a measure of factory activity steady in May after two straight months of declines.

Monday’s report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - edging up 0.1 percent instead of being unchanged as reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, nudged up 0.1 percent instead of the previously reported 0.1 percent decrease.

In April, orders for machinery fell 0.7 percent, the biggest drop since October 2016. Mining, oilfield and gas field machinery orders fell 8.3 percent.

Orders for electrical equipment, appliances and components dropped 2.0 percent, while orders for primary metals declined 0.7 percent.

Orders for transportation equipment fell 1.4 percent, reflecting a 9.1 percent tumble in nondefense aircraft orders. Motor vehicle orders rose 0.6 percent after falling 1.4 percent in March.

Unfilled orders at factories rose 0.2 percent, increasing for a second straight month. Manufacturing inventories gained 0.1 percent, rising for six consecutive months, while shipments were unchanged.

The inventories-to-shipments ratio was unchanged at 1.38.

Reporting By Lucia Mutikani; Editing by Andrea Ricci