The numbers: Orders for long-lasting goods fell in April for the first time in a year largely because of a chip shortage bedeviling automakers, but business investment rose again in a sign that a key part of the U.S. economy is still expanding rapidly.
Orders for durable goods slipped 1.3% last month, the government said Thursday. The decline stemmed almost entirely from a big drop in bookings for new cars and trucks.
Economists polled by Dow Jones and The Wall Street Journal had forecast a 0.9% increase in durable-goods orders. These are products meant to last at least three years.
If transportation is excluded, new orders rose a healthy 1.1% in April.
The biggest hurdle for manufacturers is not demand — it’s soaring — but a shortage of key supplies such as computer chips that they need to make their products.
These shortages are likely to drag on for months until bottlenecks created by the pandemic are eliminated and pentup demand is sated.
Rising prices for raw materials such as lumber and steel is also a growing problem. Companies are increasingly trying to pass those costs onto customers, a development that’s helping to fuel higher U.S. inflation.
Big picture: Manufacturers have led the U.S. economic revival. The only thing slowing them down are shortages of supplies and skilled labor.
Even better, they’ve been pouring a ton of money into improving their businesses and preparing for a post-pandemic world. Business investment has soared and now exceeds pre-pandemic levels.
As the shortages clear up and exports rebound, manufacturers are likely to grow even faster and provide a solid base of support to the U.S. economic recovery.