Orders placed with American factories rose less than forecast in April, suggesting businesses still might be working inventories down before restocking.
Bookings increased 0.3 percent, following a 4.1 percent gain in March, the Commerce Department said Monday. Economists had forecast a gain of 0.7 percent for April. Excluding transportation equipment, orders rose 0.7 percent, after a 2.4 percent gain in March.
Companies are wary of building up stockpiles as the housing industry slumps and record gasoline prices threaten consumer demand. Increased business investment and overseas demand in coming months could help the economy recover, as predicted by the Federal Reserve, after growth in the first quarter was the slowest in four years.
“We’re definitely in the later phase of the inventory correction cycle,” said Adam York, an economist at Wachovia Corp. in Charlotte.
Inventories rose 0.5 percent, the biggest gain since September, and have increased in 13 of the last 14 months.
Civilian aircraft orders fell 10.7 percent, after surging 53.6 percent in March. Bookings for automobiles fell 2.7 percent. Demand for ships and boats plunged 23.4 percent. Orders for machinery fell 1.5 percent, but bookings for computers and electronic products advanced 1.3 percent.
Orders for durable goods, which make up about 55 percent of factory demand, rose 0.8 percent in April. Bookings for capital goods excluding aircraft and military equipment, a measure of future investment, increased 2.1 percent. Shipments of these goods, part of the government’s calculation of gross domestic product, rose 1 percent.
One of the biggest declines for durable goods was a 31.5 percent plunge in construction machinery, reflecting continued troubles in home building, where contractors are slashing plans in the face of slumping demand.
Bookings for non-durable goods, including food, petroleum and chemicals, fell 0.2 percent in April. Orders of non-durable consumer goods, including apparel, food and beverages, slid 1 percent.
Monday’s report showed businesses had enough goods to last 1.24 months at April’s sales pace, down from 1.25 months in March.
Other reports in recent weeks have shown strengthening in manufacturing, which accounts for 12 percent of the economy. Orders for durable goods, which make up almost 60 percent of factory orders, rose 0.6 percent in April, according to government data. The Institute for Supply Management’s manufacturing index rose in May to the highest level in 13 months, while its inventory index showed continued liquidation of stockpiles.
“It could be that we overshot the mark on inventories,” said Norbert Ore, chairman of the institute’s survey.
