Factory orders increased for the third month in July, and other economic indicators signal August could continue the trend.
The Commerce Department reported Wednesday that orders in July rose 6.4% to $466.1 billion for the year, which was the same percentage increase in June. May’s 7.7% increase followed a big 13.5% drop in April and an 11% drop in March as the coronavirus pandemic brought the U.S. economy to a near standstill.
Shipments also increased for the third consecutive month, going up 4.6% to $479.5 billion on an annual basis. That growth is smaller, however, than June’s 10% jump.
On Tuesday, the Institute for Supply Management gave a peek at what August may bring. The organization’s purchasing manager index showed a 1.8% increase to 56% in August.
Its latest results “signaled a continued rebuilding of economic activity in August and reached its highest level of expansion since November 2018, when the index registered 58.8 percent,” Timothy Fiore, ISM’s chairman of the survey committee.
The index is based on a survey of purchasing and supply executives among the industries that contribute to the gross domestic product. A reading above 50 means expansion while below means contraction.
Inventories was the only area with declines on the survey. New orders jumped 6.1 percentage points on index to 67.6.
Before the pandemic struck, manufacturing had hit a recession last year. The index had hit a decade low in December at 47.8.
It popped back up to just above 50 in first two months of the year before falling in March below 50 then broke the December record with a 41.5 reading April when cities and states had largely shuttered their economies to slow the coronavirus spread.
The index rose to 52.6 in June once businesses began reopening.
REIT Seeks Investor for Hotels
Hersha Hospitality Trust and its China-based partner are trying to score an investor to buy into seven of its New York City hotels.
New York City suffered the most during the earliest stage of the coronavirus pandemic, recording the most deaths and most confirmed cases. Its hotel business is trying to recover from travelers largely vanishing.
Cindat Capital Management, a China-based institutional and private capital firm, bought into a portfolio of seven hotels in the city in 2016. The list of hotels in the particular portfolio includes a Candlewood Suites in Times Square, Hampton Inn Chelsea, Hampton Inn MSGA, Hampton Inn Times Square South, Holiday Inn Express Times Square, Holiday Inn Express Wall Street and the Holiday Inn Wall Street, according to a statement from JLL, which has the listing.
JLL said the city has shown resilience in recovering from previous economic downturns, showing more than 30% growth in revenue per available room in the following years.
The firm also said it anticipates a 20% or more decrease in Manhattan’s hotel supply. Neil Shah, Hersha’s chief operating officer, said on the Harrisburg, Pennsylvania-based real estate investment trust's earnings call in early August that the city could lose 25,000 rooms permanently based on data from industry researchers.
Hersha owns 48 hotels mostly in New York, Miami, Boston, Philadelphia and Washington, D.C. It saw revenue drop significantly during the pandemic along with the rest of the industry.
It reported $17.4 million in revenue in the quarter ended June 30, down from $147.5 million last year.
The seven hotels fall into the limited-service category, which have been generally doing better than full-service hotels in recovering because they tend to rely more on leisure travelers. Across the country, those hotels have been running at higher occupancy.
In the earnings call, Shah said occupancy bottomed at 19% in April across its hotels. It ended the quarter at 39%. Through managing costs at hotels, the REIT can generate gross operating profits with occupancy of 25% to 30%.
Brooks Brothers Officially Sold
A partnership between shopping mall owner Simon Property Group and Authentic Brands Group closed on buying preppy clothier Brooks Brothers.
Brooks Brothers, with roots dating back two centuries, filed for Chapter 11 bankruptcy protection in early July, one of many retailers to file as a result of the financial squeeze brought by the coronavirus pandemic.
Simon Property Group and Authentic Brands made an offer that no others tried to beat. They struck deal to pay $325 million for the brand and keep 125 of its 500 stores open.