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According to a statement made by the Commerce Department on Thursday March 5, for a sixth month in a row, the orders placed to U.S. factories declined. The silver lining to this situation is that, in a field considered “key investment category”, the numbers have risen.
January recorded a 0.2 percent decrease in factory orders, continuing the steady decline seen in December (3.5 percent) and November (1.7 percent).
There is, however, a field considered capital for business investment that saw a 0.5 percent increase in January after 2 months of decline (0.5 percent each) in December and November. Durable goods (products that last a minimum of three years) saw a 2.8 percent increase in orders in January, the same value estimated by the government
Nondurable goods, however, dropped 3.1 percent in January, continuing a 3.3 percent decrease recorded in December. Nondurable products such as chemicals, paper and foods have dropped as result of the rapid decline in the price of petroleum derivates.
During these last months the manufacture industry in the U.S. has been affected by the weak progress in China, Europe and Japan which directly influenced the number of exports from the U.S.
Another factor that contributed to the decline of American exports is the rise in dollar value, making U.S. product more costly overseas while the price for foreign services became cheaper.
A report was released Monday, March 2 by the Institute for Supply Management which stated that the manufacturing index dropped to 52.9 in February from January’s reading of 53.5. February was the fourth month to have recorded a drop in value and the lowest reading since January 2014.
Despite this, the situation is not at all somber as any reading higher than 50 means expansion in the manufacturing field and economists believe it will grow even further but at a slower pace than in the year before.
The amount with which imports surpass exports, also known as trade deficit has expanded in Q4 which meant a 1.1 percent decrease in economic growth. This led to the overall economy being affected, with an annual rate of only 2.2 percent in Q4 in comparison to the 5 percent recorded in Q3.
Experts, however, believe that with the help of increased employment rate and better wages, there will be a growth in GDP of above 3 percent this year.
Image Source: Business Insider
