Dragged down by a decline in commercial aircraft orders, new U.S. manufacturing orders fell more than expected in January.

On Tuesday, March 5, the Census Bureau of the U.S. Department of Commerce released data showing that U.S. factory orders fell by 3.6% month-on-month in January, which was worse than market expectations of 2.9% and the largest decline since April 2020. In addition, the previous value was revised from a month-on-month increase of 0.2% to a month-on-month decrease of 0.3%. Factory orders fell 1.6% year-on-year in January.

Some analysts pointed out that the main reason for the decline in factory orders in January was the sharp decline in commercial aircraft bookings.

On January 5 this year, a Boeing 737 Max 9 aircraft door fell off during flight, causing the US Federal Aviation Administration (FAA) to ground the entire Max 9 series. The incident dealt a major blow to Boeing's reputation, and the market has doubts about the safety and quality of Boeing aircraft. Boeing reported on its website that it received just three orders for commercial airplanes in January, down from 371 orders in December.

In terms of each sub-index:

Commercial aircraft orders plunged 58.9% in January after rising 1.0% in December.

Orders for computers and electronics surged 1.3%.

Orders for motor vehicle bodies, parts and trailers rose 0.7%.

Overall transportation orders fell 16.2% in January after falling 0.6% in December.

Orders for electrical equipment, appliances and parts rose 0.9%.

Machinery orders fell slightly by 0.3%. In addition, orders for raw materials and processed metal products also declined.

Shipments of manufactured goods fell 1.0% and inventories edged down 0.1%. Factory backlogs rose 0.2% in January after rising 1.3% the previous month.

The government also reported that U.S. orders for non-defense capital goods (excluding aircraft) were flat in January, missing expectations for a 0.1% increase. Shipments of core capital goods rose 0.9%, up from a previously reported 0.8% increase. Orders for non-defense capital goods plunged 19.5%, beating expectations of 19.4%. It was reported last week that shipments of these goods fell 3.0%, affecting the calculation of business equipment spending in GDP. Business equipment spending has shrunk for two consecutive months, showing that companies are cautious in investing in equipment.

Some analysts pointed out that since March 2022, the Federal Reserve has raised interest rates by a cumulative 525 basis points, leading to a slowdown in production in 2023. Although the U.S. manufacturing industry faces challenges in 2023, it may be recovering overall. The sharp decline in commercial aircraft orders is not representative of trends across the manufacturing industry, such as surging demand for computers and electronics.

Additionally, a survey from the Institute for Supply Management showed manufacturers have become more optimistic about the future.