U.S. factory orders increased 0.7 percent in May; local companies see increase, too

Wednesday, July 11, 2012

WASHINGTON -- Companies placed more orders with U.S. factories in May after two months of declining factory orders, demanding more computers, machinery and other equipment that signal investment plans.

Still, factory orders are down from the start of the year. And more recent data show manufacturing activity shrank in June for the first time in three years, adding to worries that weaker global growth is weighing on the U.S. economy.

"The demand for manufactured goods is recovering moderately and irregularly, but that recovery has been relatively weak relative to the magnitude of the previous declines," said Steven Wood, chief economist at Insight Economics.

Cape Girardeau area manufacturers say their orders also have been picking up in recent months.

BioKyowa has seen an increase in demand that started in 2010 and has continued to be strong since then, said plant manager Joel Melka. Its products, amino acids, are sold worldwide into the food and pharmaceutical business sectors.

"Both of these areas have shown strong demand for our products since the recession ended," Melka said. "We anticipate the strong demand for our products to continue for the remainder of the year and into next year."

To support the growth in demand for its products, BioKyowa increased its staff by 20 people this year with the majority of the additional employees in its manufacturing department.

HAVCO is now operating at levels well above the lows seen in 2009, said Bruce Bader, president and CEO.

"In recent months we have seen some minor softening of our customers backlogs but not significant enough to affect production levels," he said.

Blair Packaging in Scott City started seeing increases in orders in the middle of April, said president Ron Unterreiner. He estimated Blair Packaging's business is about 5 percent ahead of last year.

"It's not outstanding, but it's encouraging," he said.

At Blair Best Box in Cape Girardeau, in the former Thorngate LTD building, business had been slow since November but is picking up again.

"Getting ready to do a large media order now and will be running two shifts through October starting in about two weeks," Unterreiner said.

U.S. factory orders increased 0.7 percent in May from April, according to the Commerce Department.

Core capital goods, which include machinery and computers, rose 2.1 percent. That's better than the 1.6 percent estimated in a preliminary report a week ago and shows companies are still making investment plans.

Overall factory orders increased to $469 billion. That's 43.5 percent higher than the recession low reached in March 2009. But orders have fallen 2.5 percent over the past five months from their post-recession high hit in December.

Manufacturing has lost some vigor this year. U.S. job growth has slowed and consumers and businesses are less confident in the economy. Europe's debt crisis has reduced demand for U.S. exports. And manufacturing has slowed in big countries like China, which rely on U.S. factories for equipment, machinery and vehicles.

Orders for long-lasting durable goods, everything from airplanes to refrigerators, rose 1.3 percent in May. Orders for nondurable goods, which include food, paper, chemicals and energy products, edged up 0.2 percent. The increase may have been held back by falling oil and gas prices.

Economists said the manufacturing figures from the ISM survey were consistent with growth at an annual rate of 1.5 percent or less.

Such growth would be lower than the January-March quarter's tepid annual pace of 1.9 percent. Growth of 1.9 percent typically generates roughly 90,000 jobs a month. That's considered too weak to reduce the unemployment rate, which was 8.2 percent in May.

Southeast Missourian business editor Melissa Miller contributed to this report.

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