US Factory orders: Weakness in durables – Wells Fargo

After back-to-back monthly increases in factory orders, April saw some retrenchment, noted analysts at Wells Fargo. They saw signs of tightness in the supply chain in the report.

Key Quotes:

“Factory orders fell 0.8 percent in April. Much of the weakness was on the durable goods side. The initially reported decline of 1.7 percent in durable goods orders for April was pared back slightly to reflect a 1.6 percent drop.”

“Labor shortages, rising material prices and lean customer inventories may all be factors in what we see as some early indications of supply chain disruption. Unfilled orders have increased in five of the past six months and are fast approaching all-time highs. Meanwhile, in last week’s ISM report for May, order backlogs were higher than they have been at any point in the current cycle.”