Orders from U.S. factories saw a significant drop in April, following a surge in March. Businesses had rushed to make purchases in March, anticipating tariffs that were expected to impact manufacturing costs. According to data from the Census Bureau, new orders for manufactured goods fell by 3.7 percent in April, a decline that was steeper than what many economists had predicted. Analysts had forecasted a decrease of about 3.1 percent, while Dow Jones had estimated a drop of 3.3 percent.
Despite this monthly decline, factory orders were up by 2 percent compared to the same time last year. April’s downturn stands in stark contrast to March, which recorded a 3.4 percent increase, marking the end of five consecutive months of growth.
Manufacturing, which makes up about 10.2 percent of the U.S. economy, has faced challenges due to President Donald Trump’s tariffs. The administration views these tariffs as a way to boost revenue and revitalize the struggling industrial sector. However, many economists argue that this goal is unrealistic in the short term due to ongoing labor shortages and other structural issues.
The transportation sector was particularly hard hit, with orders plummeting by 17.1 percent. This decline was largely driven by a staggering 51.5 percent drop in orders for commercial aircraft. Additionally, orders for motor vehicles, parts, and trailers fell by 0.7 percent. Other sectors also experienced mixed results; electrical equipment, appliances, and components saw a slight decline of 0.3 percent, while manufacturing for computers and other electronic products grew by 1 percent. Machinery orders also increased by 0.6 percent.
When excluding transportation, overall orders dipped by 0.5 percent, which mirrors the previous month’s decline in non-transportation goods. Furthermore, orders for non-defense capital goods, excluding aircraft, which is a key indicator of business spending on equipment, decreased by 1.5 percent in April, slightly worse than earlier estimates.
The situation in manufacturing appears to be worsening, as an Institute for Supply Management survey indicated that manufacturing has contracted for three consecutive months. Suppliers are also taking longer to deliver materials to factories, the longest delay seen in nearly three years.