US factory orders fall in September as trade war bites
US factories suffered a steeper-than-expected fall in orders in September, survey data has shown, suggesting the country’s manufacturing sector is still being held back by the US-China trade war.
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Goods orders in the manufacturing sector fell 0.6 per cent last month compared to the month before, following a 0.1 per cent drop in August, the US Census Bureau said today. The reading was below analysts’ forecast of 0.5 per cent.
Manufacturing and business investment in the US have been hard-hit by the trade war President Donald Trump has waged on China, which he accuses of abusing the international trade system.
Yet hopes of a resolution to the trade dispute have boosted stock markets today. Beijing and Washington said on Friday that there had been progress, with a so-called phase one agreement expected to be signed soon.
Year on year, US factory orders fell 0.3 per cent in September as shipments of manufactured goods fell 0.2 per cent.
The transportation sub-sector was particularly hard hit. Transport equipment order fell 2.8 per cent while orders for civilian aircraft and parts plunged 11.8 per cent.
The US Federal Reserve last week cut interest rates in an effort to protect the US economy against the effects of the trade war.
Bruce Kasman, an analyst at JP Morgan, said the “need for further insurance” cuts from the Fed is “no longer obvious”.
Read more: Chinese growth slows to 30-year low under weight of trade war
He said JP Morgan analysts have “confidence in a 2020 growth rebound” due to “the lagged effects of fading geopolitical tail risks and the effective transmission of central bank easing to global”.
(Image credit: Getty)