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Economic Report: U.S. factory orders rise modest 0.3% in May

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U.S. factory orders rose a modest 0.3% in April after a much larger gain in the prior month, perhaps a sign of some slight softening in the manufacturing sector.

Economists polled by The Wall Street Journal had forecast a 0.6% gain.

American factories have been very busy over the past year because of strong demand for machines, electronics, cars, and other big-ticket items designed to last at least three years.

The biggest obstacles have been shortages of supplies and labor. They are contributing to the highest U.S. inflation in 40 years.

Yet with the Federal Reserve raising interest rates to try to tame inflation, the economy is likely to slow. Economists are watching the manufacturing sector closely for signs of softening.

Factory orders have been very uneven in 2022 after a string of generally strong increases in the prior two years.

Durable-goods orders rose a revised 0.5% in April from an initially reported 0.4% increase. 

Orders for nondurable goods such as clothes or food items edged up 0.2% in the month. 

Another measure of factory conditions seen as a proxy for business investment rose by a revised 0.4%, the government said, a tick higher than originally reported.

These so-called core orders strip out the up-and-down transportation sector as well as government spending on military equipment. They are viewed by investors as a signal of future business prospects.

“If business confidence is wavering, firms would be more circumspect in their investment decisions,” said chief economist Richard Moody of Regions Financial.

In recent trades, the Dow Jones Industrial Average
DJIA,
-0.27%

and S&P 500
SPX,
+0.05%

declined.

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