U.S. factory orders unchanged in February

WASHINGTON (Reuters) – New orders for U.S.-made goods were unexpectedly flat in February, and could remain weak as a global coronavirus outbreak strains supply chains and undercuts the manufacturing sector.

The Commerce Department said on Thursday the unchanged reading in factory orders followed a 0.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} decline in January. Economists polled by Reuters had forecast factory orders would increase 0.2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in February.

The Institute for Supply Management (ISM) reported on Wednesday that its index of national factory activity fell to a reading of 49.1 in March from 50.1 in February. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of the U.S. economy.

As well as causing disruptions in supply chains, the coronavirus pandemic has shut down demand, with the transportation industry almost crawling to a halt, and restaurants, bars and other social venues shutting.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 0.9{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in February instead of declining 0.8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} as reported last month.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, decreased 0.8 in February, rather than falling 0.7{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} as previously reported.