WASHINGTON (AP) — Orders to U.S. factories for big-ticket manufactured goods increased just 0.4% in August following a much larger gain in the previous month.
It was the fourth consecutive monthly increase, but the most recent uptick was far weaker than the 11.7% surge in July, the Commerce Department reported Friday.
Economists had expected production to ease somewhat after manufacturers rebounded strongly in previous months from COVID-19 related shutdowns, but the growth in August was less than half what economists had projected.
A key category that tracks business investment plans rose 1.8% in August, compared with gains of 2.5% in July and 4.3% in June.
Economists appear divided over how to interpret the data. Some saw the string of positive numbers as a hopeful sign of a strong bounce back. Others, however, believe the modest advance overall signals that manufacturing appears paced for a slow recovery now that an initial boost from re-openings and government aid has faded.
“We’re now in Phase 2 of this recovery, in which the economy will face persistent headwinds of the Covid-19 crisis without the support of meaningful fiscal stimulus and as a vaccine still remains absent,” said Oren Klachkin, lead U.S. economist at Oxford Economics.
The report showed that the volatile transportation sector rose a modest 0.5% as orders for motor vehicles and parts fell 4%, after a 21.7% surge in July as auto plants reopened.
Excluding transportation, orders would have risen 0.4%.
The changes left total orders at a seasonally adjusted $232.8 billion in August.