WASHINGTON (AP) — Factory orders for long-lasting goods such as autos, airplanes and electronics were flat in November, as the impact of a strong dollar and struggling global economy weigh on U.S. manufacturers.
Orders for durable goods were nearly unchanged in November after a 2.9 percent increase in October, the Commerce Department said Wednesday. Demand for autos, electronic products and fabricated metals accelerated last month, but their gains were offset by declines in machinery and aircraft. Orders for capital goods not including aircraft — a key proxy for business investment — fell 0.4 percent.
Durable goods orders have tumbled 3.7 percent year-to-date. Slow economic growth among major U.S. trading partners — including Europe, China and Japan — has caused the dollar to rise in value, making U.S. goods more expensive overseas and less competitive. Lower oil prices have also squeezed demand for pipelines and equipment by energy companies.
Much of this year's decline in orders comes from a 36.9 percent drop in the aircraft category, along with waning demand for machinery and primary metals. Those losses have hurt factory hiring in recent months and cut into exports abroad.
The dollar has appreciated more than 11 percent in the past 12 months against a basket of foreign currencies, according to the Federal Reserve. As the dollar strengthens, the prices for American-made goods are inflated and sales suffer overseas. This pressure led to weak manufacturing activity last month.
The Institute for Supply Management reported that its index of factory activity in November dropped to 48.6 from 50.1 in October. Any reading below 50 signals contraction and the index has tumbled below that critical level for the first time since November 2012.
Still, the broader U.S. economy has largely been insulated from the challenges confronting factories. Orders for motor vehicles and electronics have increased this in large part because of steady demand from domestic consumers. Unemployment has dipped to a healthy 5 percent, prompting many Americans to buy more cars and meals at restaurants.
Overall consumer spending rose 0.3 percent in November, the Commerce Department said Wednesday in a separate report. Those expenditures account for 70 percent of all U.S. economic activity.