Decline in New Factory Orders
This article discusses how many factories are experiencing fewer new orders than what had been expected. The increase has been the slowest experienced by the service sector in about four years. Part of the problem may be contributed by the decline that has been ongoing within the housing industry. Orders for goods that can be expected to last more than three years fell 8.8% in January, but now that the results from February are in, orders have risen by 1.7%. Even though the economy is turning out to be growing slower than analysts have expected, the Federal Reserve is predicted to keep interest rates at their current levels. Do you think that the slowing number of new orders may cause companies to begin considering their short-term and long-term profits in order to decide if they need to leave their current market share in search of more work in other areas of the service sector?
2 comments:
Many factories are experiencing fewer new orders, in that way, the decrease in demand what will happen in the supply? Will the supply increase? Moreover, I wonder why there are fewer new orders? What reason lead factories to experience that?
I think that the factories may start looking at their short-term and long-term profits closer due to the lack of sales and also the slow pace of the economy. Some factories, sensing that profits may be consistantly low because of the slow paced economy in the long run, may try to boost their short-term profits with sales or reducing prices in order to sell more and make a higher profit. Then, after making a higher profit in the short run, they may try to leave the market and get into something else.
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