Rise in US factory orders beats expectations in July
Factory orders rose 0.9% after a revised 0.2% drop in June
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[WASHINGTON] New orders for US factory goods increased more than expected in July amid a rebound in demand for aircraft.
Factory orders rose 0.9 per cent after a revised 0.2 per cent drop in June, the Commerce Department’s Census Bureau said on Wednesday (Sep 2). Economists polled by Reuters had forecast orders would rebound 0.6 per cent after a previously reported 0.3 per cent drop in June.
Orders advanced 6.5 per cent on a year-over-year basis in July. Manufacturing, which accounts for 9.4 per cent of the economy, is getting a tailwind from the artificial intelligence buildout, though the six-month US-Israeli war with Iran is straining supply chains and keeping input prices elevated. An Institute for Supply Management survey on Tuesday showed manufacturers grumbling about higher prices in August because of the war and import tariffs, with some describing the economy as “annoying.”
The rebound in factory orders in July was led by a 12.7 per cent surge in orders for civilian aircraft and parts. Orders for motor vehicle bodies, parts and trailers rose 0.4 per cent. Machinery orders increased 0.8 per cent. Orders for computers and electronic products dropped 1.1 per cent, but were up 14.3 per cent year over year. Orders for electrical equipment, appliances and components fell 0.3 per cent.
The Census Bureau also reported that orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, were unchanged in July rather than up 0.2 per cent, as reported last week.
Shipments of these so-called core capital goods increased 1.2 per cent instead of the initially estimated 1.4 per cent.
The slowdown in core capital goods orders in July is likely temporary. The government last week reported a surge in capital goods imports in July. The AI spending frenzy is also fuelling imports and business spending on equipment. REUTERS
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