Orders placed at U.S. factories rose less than forecast in April as non-durables and consumer goods cut into the purchases of items intended for long term use.
Placements at American manufacturers rose 1 percent after a 4.7 percent fall in March, originally reported by the Commerce Department as -4.0 percent. Economists in the Bloomberg survey had predicted a 1.5 percent gain for April.
Booking for durable goods, those designed to remain in use for at least three years, climbed 3.5 percent in April but demand for non-durables fell 1 percent.
In a separate release the service sector purchasing managers’ index from the Institute for Supply Management rose to 53.7 in May from 53.1. Economists had predicted a reading of 53.5.
As opposed to the manufacturing survey issued Monday where the headline index at 49.0 and many of the components were below the 50 division between expansion and contraction the non-manufacturing or services survey was split.
Business activity went up to 56.5 from 55.0; new orders rose to 56.0 from 54.5 and backorders were unchanged at 51.5. Export orders fell to 50.0 from 53.5; import orders dropped to 49.5 from 58.5, and employment slid to 50.1 from 52.0.
The private payroll company ADP noted that jobs rolls increased by 135,000 in May. While this was less than analysts’ estimate of 165,000 new employees, the report has only marginal correlation to Friday’s non-farm payrolls report. The prior month was revised to 113,000 from 119,000.
Economists are predicting that 165,000 new jobs will be reported in the government’s Employment Situation report in two days. That would be less than the 195,750 monthly averages so far this year but close to the 177,450 average of the past twelve months.
New claims for state unemployment insurance are forecast to drop to 345,000 in the week ending June 1 from 354,000 when issued tomorrow at 8:30 am ET. The weekly average in May, 347,250, was slightly elevated from that of April at 343,000.
Economists generally consider an average of 325,000 or less a coincident indicator that the economy may begin creating more jobs.
Chief Market Strategist