Published: March 5, 2024 at 10:02 a.m. ET
Story developing. Stay tuned for updates here.
The numbers: U.S. factory orders fell 3.6% in January large due to fewer contracts for Boeing passenger planes, but there was not much sign of a broad revival among manufacturers.
Economists surveyed by the Wall Street Journal had forecast a 3.1% decline.
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Story developing. Stay tuned for updates here.
The numbers: U.S. factory orders fell 3.6% in January large due to fewer contracts for Boeing passenger planes, but there was not much sign of a broad revival among manufacturers.
Economists surveyed by the Wall Street Journal had forecast a 3.1% decline.
If transportation is excluded, orders for manufactured goods dropped a smaller 0.8%.
Big picture: Manufacturers have struggled to achieve robust growth for the past few years because of shifting consumer spending habits and higher interest rates orchestrated by the Federal Reserve to quell inflation.
Large subsidies and incentives by the Biden administration have helped to prop up industrial spending to some extent, but manufacturers could get a boost later in the year if the Fed cuts interest rates as expected.
That could help increase business investment once borrowing costs get cheaper.
Key details: Businesses are investing plenty in new computing power, an offshoot of Bide subsidies and the budding artificial-intelligence revolution. Spending is up sharply compared to a year earlier.
All other major areas of the industrial sector are quite weak, however.
Core capital goods orders, a proxy for broader business investment, was flat in January. These orders dropped 0.6% in the prior month and are down slightly compared to a year earlier.
Shipments of manufactured goods already produced fell almost 1% and have declined in four of the past five months.
These figures are factored into gross domestic product report — the official scorecard of the U.S. economy — and suggest GDP in the first quarter might not get much help from business investment.
The Dow Jones Industrial Average
DJIA
and S&P500
SPX
fell in Tuesday trades.
New York Community Bancorp Inc. has been looking to shed problem commercial real estate from its books after last week reporting a surprising $185 million loss relating to a pair of loans as part of its fourth-quarter earnings results.
The lender has offered investors a chance to bid on a $22.4 million mortgage backed by three five-story walk-up apartment buildings in Washington Heights, a neighborhood in northern Manhattan, according to details of the offering viewed by MarketWatch.
The debt backs mostly rent-regulated apartments and affiliated mixed-use space. The mortgage matured in early January, with the full amount of the debt now due, plus interest at a 20% default rate, according to the offering.
Other landlords in the neighborhood who are subject to New York City’s rent-regulation laws, which were strengthened in 2019, have seen property values tumble by an estimated 50%, according to Bloomberg News.
New York Community Bancorp
NYCB
didn’t respond to requests for comment for this article.
Efforts by the bank to tackle its exposure to problem real-estate loans come as its stock has dropped by more than 60% so far this year.
The lender has a large exposure to rent-regulated multifamily properties in New York City, about a $1.8 billion office-building exposure in the city and about $250 million to $300 million in maturities in the next few years, according to Deutsche Bank researchers.
Pressures facing the bank are reigniting fears about regional banks and their commercial real-estate exposure. Treasury Secretary Janet Yellen told lawmakers on Tuesday that she was concerned about U.S. commercial real estate, saying that some institutions could be “quite stressed,” while also saying the challenge looks manageable.
Landlords have been reeling from slumping property prices and higher borrowing costs since the Federal Reserve in 2022 began dramatically raising interest rates to quell high inflation.
Many regional banks have responded by trying to quietly shed exposure to problem commercial real estate. That activity has picked up since the collapse of Silicon Valley Bank and Signature Bank last March and JPMorgan Chase & Co.’s
JPM
takeover of First Republic Bank, which deeply unsettled markets.
Late Tuesday, Moody’s Investors Service downgraded New York Community Bancorp’s credit by two notches into speculative-grade or “junk” status.
“We took decisive actions to fortify our balance sheet and strengthen our risk management processes during the fourth quarter,” Thomas Cangemi, New York Community Bancorp’s president and chief executive officer, said in a statement following the downgrade.
Cangemi also said that the bank has ample liquidity and has been growing its deposits and that the downgrade wasn’t expected to have a material impact on the lender’s contractual arrangements.
Sales of assets, even at a discount, can sometimes help banks get ahead of greater problems facing the industry, loan buyers said. But they also expect commercial-real-estate lenders to endure a challenging few years, especially as a wall of old debt comes due at a time of higher interest rates.
See: ‘No one is throwing good money after bad.’ Why 2024 looks like trouble for commercial real estate.