Multiple news outlets have reported that the numbers for orders at US factories for long-lasting items dropped 2.2% in February 2022. However, the business investment declined for the first time in one year.
The reports also suggested high prices and continuing supply chain issues were constraining powerful economic recovery. A government official said orders for US-made products decreased for the first time in 5 months during the last 3 years.
However, the Wall Street Journal conducted a poll that suggested a 1% decrease. The recent decline was focused on autos, passenger planes, and 2 other variable categories that can change rapidly. The poll results showed much softer bookings in various major categories except for computers.
Growing Inflation & Supply Chain Issues
A more perfect measure of demand often known as core orders dropped 0.3% in a month. The key number takes off a massive amount of military and transportation hardware and marked the 1st drop in 12 months. But the orders for most of the variable products and goods have increased 10% during the last year.
The researchers have also suggested that more businesses still maintain plenty of demand for essential goods and products. Moreover, the Russian invasion of Ukraine drove the growing inflation and supply chain problems in many key sectors.
The ongoing war in Ukraine could lift already shaking global supply chains after a fresh coronavirus outbreak in China. The Federal Reserve is also planning to increase interest rates to take measures and bring down the growing inflation rate. It will supposedly improve the investment cost.
Expected Economic Growth in the US
Most economic experts have predicted that US growth will gradually enhance this year by extending at a reliable pace. Multiple reports have said orders for new commercial airplanes declined 30% in the month of February. It was suggested for most of the decrease in the headline numbers.
It is important that Boeing BA last month reported a 1.62% drop in various orders compared to the orders booked in January 2022. The orders for expensive American airplanes have also shown a continuous decline. Meanwhile, automobile manufacturers have reported a 0.5% drop in new orders.
Most Americans still desire new cars in spite of increasing interest rates and gas prices. But General Motors rose 1.30%, Ford increased 0.90%, while others were unable to produce more vehicles amid chip shortage.
However, most of the new orders were softer except for the transportation sector. Bookings for metal parts, industrial metals, networking items, and electronics were also dropped significantly. There were computers and military items that only provided a considerable boost.
A significant drop in Business Investment
A significant drop in business investment orders was marked the 1st attempt since February 2021. A large number of investors assumed these orders as predictions of future business prospects. Last year, the business investment volume boosted by 11%, but there was a prediction of a sharp cut back from companies.
The lead US economist Oren Klatskin of the Oxford Economics Department issued a statement. She said most businesses could show more vigilance following the recent events of logistics issues and increasing pressure on prices. But these issues are supposed to pull back considerably on investment.
Klatskin said we continue to experience gradual and efficient growth if we consider month-to-month moves. It is noteworthy that the market also reacted as the Dow Jones Industrial Average (DJIA) increased 1.02% and SPX rose 1.43% on Thursday trading.