US factory orders plunged 10.3 per cent in March
Orders for US-made goods plunged 10.3 per cent in March, and could fall further as coronavirus shutters the economy.
The US Department of Commerce said factory orders declined 10.3 per cent, as coronavirus lockdown measures began to shut down the economy.
The steeper than expected fall in orders came as orders for both durable and non-durable goods fell. Durable goods orders plunged 14.7 per cent, while orders for nondurable goods fell 5.8 per cent.
It is further confirmation that the coronavirus pandemic has shuttered the US economy. Last week, figures showed that US factories’ output slumped to 36.1 in April. Anything below 50 represents a contraction.
The fall represents the lowest reading in 11 years, driven by the steepest decline in manufacturing output on record.
Additionally, US GDP shrank at an annualised rate of 4.8 per cent in the January to March period, worse than economists had expected.
The coming recession – technically two quarters of contraction – will bring to an end more than ten years of growth in the US. GDP had increased 2.1 per cent in the final quarter of 2019.
US stocks drop on economic uncertainty
US stocks faced a difficult start to trading after US President Donald Trump stoked tensions with China over coronavirus, adding to the economic uncertainty. The Dow Jones sank into the red, shedding close to 220 points to 23,506 points, with investors concerned Trump is looking to blame China for the pandemic, which could worsen the economic outlook.
Connor Campbell, financial analyst at Spreadex, said: “How the US indices perform across the rest of the session will likely be dependent on whether Donald Trump or one of his cronies lobs any more verbal grenades towards China on the topic of tariffs or lab-grown virus conspiracies.”
The S&P 500 index edged down 0.35 per cent, while the Nasdaq Composite was up 0.46 per cent.
Sentiment was also dented by investor Warren Buffet’s admission that he had sold all of Berkshire Hathaway’s shares in US airline stocks. Delta, United and American Airlines each tumbled around eight per cent in early trading. Alaska Air Group fell more than seven per cent.