US factory orders fall in July on weak aircraft demand

-A +A

WASHINGTON (Sept 6): New orders for US-made goods fell slightly more than expected in July, weighed down by weak demand for aircraft, but signs of a pickup in business spending suggested that the manufacturing sector remained on solid ground.

Factory goods orders dropped 0.8%, the Commerce Department said on Thursday. Data for June was revised slightly down to show factory orders rising 0.6% instead of the previously reported 0.7% increase.

Economists polled by Reuters had forecast factory orders falling 0.6% in July. Orders increased 8.3% on a year-on-year basis in July.

Despite the drop in factory orders in July, manufacturing, which accounts for about 12% of the US economy, remains strong. An Institute for Supply Management survey of manufacturers published on Tuesday showed factory activity accelerated to more than a 14-year high in August.

But there are concerns an escalating trade war between United States and China could hurt business confidence and undercut capital spending. A strong dollar and worker shortages are also seen slowing momentum in the manufacturing sector.

In July, orders for transportation equipment fell 5.2%, dragged down by a 35.4% plunge in the volatile orders for civilian aircraft and parts. Orders for defense aircraft and parts tumbled 34.4% in July. Transportation orders rose 2.0% in June.

Orders for motor vehicles increased 1.3% in July. There were increases in orders for machinery, primary metals and computers and electronic products. Orders for fabricated metal products fell as did those for electronic equipment, appliances and components.

The Commerce Department also said July orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, jumped 1.6% instead of increasing 1.4% as reported last month. Orders for these so-called core capital goods rose 0.8% in June.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 1.0% in July instead of climbing 0.9% as reported last month.

Core capital goods shipments rose 1.0% in June. Business spending on equipment slowed in the second quarter after growing robustly since the first quarter of 2017.