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Quake shrinks US manufacturing.

US manufacturing contracted for the first time in 10 months in April as a result of supply chain disruptions in the wake of the March earthquake in Japan.

"The Japan factor is going to be meaningful for second-quarter GDP," said Julia Coronado, chief North America economist at BNP Paribas in New York. "We are going to see a drawdown in inventories and we are going to see a slowdown in auto sales."

Drop in new orders

New orders for US manufactured goods posted their largest drop in six months in April after a steep fall in demand for transportation equipment, suggesting some cooling in factory activity.

Durable goods orders declined 3.6 per cent in the month, worse than economists' expectations for a 2.2 per cent fall. March's orders were revised up to a 4.4 per cent rise from a 4.1 per cent increase, a Commerce Department report said.

While durable goods orders are extremely volatile, the report added to a raft of recent data suggesting that the loss of economic growth momentum encountered as the year started persisted into the early part of the second quarter.

It also underscored the magnitude of the impact of supply chain disruptions from the Japanese earthquake on the economy.

The economic recovery that started in the second half of 2009 has been led by the manufacturing sector.

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Publication:Gulf Industry
Date:Jun 1, 2011
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