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The numbers: U.S. manufacturers such as General Motors and Whirlpool have plenty of orders, all right. The problem is producing enough autos, appliances and other big-ticket items to satisfy customer demand.
Orders for U.S durable goods — products meant to last at least three years — fell 0.5% in October, the government said Wednesday. Economists polled by the Wall Street Journal had forecast a 0.3% increase.
Yet the decline stemmed entirely from fewer orders for passenger planes, an up-and-down category that often distorts the level of underlying demand in the economy.
Bookings rose 0.5% if autos and planes — transportation — are excluded.
Over the past year orders for durable goods have risen by more than double digits in percentage terms and easily exceed pre-pandemic levels. Business investment has also increased sharply and rose in October for the eighth straight month.
The biggest problem for manufacturers is finding enough workers and supplies to make as much as they could sell. Persistent shortages of labor and materials have slowed production and contributed to the biggest surge in U.S. inflation in 31 years.
Read: Consumer prices soar again and push U.S. rate of inflation to 31-year high
Big picture: Manufacturers fared better than service-oriented companies during the pandemic and recovered a lot faster. They have no direct contact with customers and were largely able to avoid major disruptions.
They are still expanding rapidly, but the scarcity of labor and ongoing supply bottlenecks are likely to remain big obstacles well into next year. That will keep inflation relatively high and retard what has been a surprisingly strong U.S. economic recovery.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open lower in Wednesday trades. Stocks have fallen off recent record highs.
