Citing recent US media reports, due to the decline in demand for durable goods such as furniture and home appliances, factory orders have declined for three consecutive months. Now most domestic manufacturers in the United States have completed the backlog of orders in the past.
Orders were built up due to supply chain disruptions in the early days of the coronavirus outbreak, leaving manufacturing largely immune to mass layoffs in other sectors such as technology and finance.
Supply chains, disrupted during the pandemic and again following the outbreak of the Russia-Ukraine conflict, have improved considerably over the past year, and manufacturing backlogs are shrinking rapidly. Meanwhile, demand for durable goods has fallen in recent months as consumers and businesses cut back on purchases of products such as furniture after spending more on things like travel and dining out.
Shannon Seery, an economist at Wells Fargo, said that while weak demand has allowed manufacturers to reduce backlogs, once the backlogs are dealt with and demand remains subdued, companies will start thinking about mass layoffs.
Orders for nondefense capital goods, a key measure of business investment, fell in four of the seven months ended in February, according to the Commerce Department. Orders for durable goods, such as appliances, automobiles and furniture, have declined for three straight months in the past four months through February.
A survey of the Federal Reserve's Chicago-area manufacturers showed hiring in April would be down from the previous month as the pace of hiring slowed. Employers surveyed said they expect to continue to shrink their hiring over the next 12 months.
Manufacturing lost jobs in February for the first time in 21 months, according to the Bureau of Labor Statistics. There were more manufacturing job losses in March.
Some scholars believe that manufacturing companies may begin large-scale layoffs this year. Economist Joshua Shapiro said: "Manufacturing companies will do everything they can to avoid layoffs, but I don't think companies will last long and they will eventually have to bite the bullet and start laying off workers."