US factory orders slump in April

WASHINGTON (Reuters) -New orders for U.S.-manufactured goods dropped sharply in April and business spending on equipment appeared to have lost momentum at the start of the second quarter as the boost from front-loading of purchases ahead of tariffs faded.

Factory orders fell 3.7% after an unrevised 3.4% jump in March, the Commerce Department's Census Bureau said on Tuesday. Economists polled by Reuters had forecast factory orders declining 3.1%. They rose 2.0% on a year-on-year basis in April.

Manufacturing, which accounts for 10.2% of the economy, has been pressured by President Donald Trump's aggressive tariffs.

An Institute for Supply Management survey on Monday showed manufacturing contracted for a third straight month in May and suppliers took the longest time in nearly three years to deliver inputs to factories.

Trump sees the tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining industrial base, a feat that economists argued was impossible in the short term because of labor shortages and other structural issues.

Commercial aircraft orders plunged 51.5% in April. Orders for motor vehicles, parts and trailers dropped 0.7%, helping to depress transportation equipment orders by 17.1%. Orders for computers and electronic products gained 1.0%, while those for electrical equipment, appliances and components slipped 0.3%.

Machinery orders rose 0.6%. Excluding transportation, orders fell 0.5%, matching March's decline.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, decreased 1.5% in April rather than 1.3% as estimated last month.

Shipments of these so-called core capital goods fell by an unrevised 0.1%. Business spending on equipment rebounded sharply in the first quarter, largely driven by front-running of information processing equipment ahead of tariffs.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

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