Factory Orders Accelerated In United States, Even Amid Economic Slowdown

The Commerce Department revealed that factory orders increased in August by about 1.2%, signaling that new orders for goods made in the United States is increasing, even amid the economic slowdown that has occurred because of labor and raw material shortages, as well as because of decreasing consumer confidence.

This latest news is a positive sign for business, factories, and the economy. Factories in the United States have greatly struggled since the COVID-19 pandemic first began in 2020. Factory closures and COVID-19 concerns kept production from ramping up. When consumer demand surged in 2021 as more Americans got vaccinated, many factories struggled to meet this demand because of labor and raw material shortages.

However, this latest data from the Commerce Department suggests that factories are able to find ways to work within this economic slowdown, even if consumer confidence does fall slightly. This data from the Commerce Department also revealed that Augusts’ core capital goods orders have been revised slightly up. Per this latest data, factory orders have now increased for four straight months in the United States, yet another positive sign for manufacturing and businesses.

Of course, there are still major issues that may need to be dealt with before factories in the United States can truly get back to normal. Labor shortages that continue to grip the nation may be the most important, though the global supply chain issues also consistently threaten the overall production and manufacturing done in the country. 

The global supply chain problems are affecting countless businesses worldwide. When it comes to factories in the United States, the shipments of factory goods barely rose by 0.1% in August after rising about 1.5% in July. Shipping of goods from factories, therefore, seems to remain a huge issue.

This, in turn, will affect the goods that consumers are able to buy in their local stores. Businesses around the nation are attempting to restock their inventories, especially before the end of the year holiday season hits. This holiday shopping season is expected to be big, but stores may not have the large inventory and stock as desired. Many businesses have been struggling to build back their inventory after consumer demand surged and depleted many. 

Therefore, while factory orders have increased in the past four months, there are still major hurdles that may keep factories from performing at the level they previously did. Plus, global supply chain issues may also keep goods from factories from hitting the shelves at local stores, which could negatively impact the economy as a whole.

If consumer demand continues to increase at the end of the year, factories and stores alike may not be able to meet this high demand, just as so many struggled to earlier this year. While many businesses have already attempted to think ahead to stop these issues from hindering their holiday season — for example, Walmart has created more ships and trucks to transport goods to their stores — there’s no telling yet just how businesses will be affected at the end of this year.