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US factory orders fall 3.3 percent

  • Factory goods orders declined in July, falling slightly more than expected by economists polled by Reuters.
  • This was the biggest drop since August 2014.
A RoMan Manufacturing employee works on the factory floor in Wyoming, Michigan.
Ann Hermes | The Christian Science Monitor | Getty Images
A RoMan Manufacturing employee works on the factory floor in Wyoming, Michigan.

New orders for U.S.-made goods recorded their biggest drop in nearly three years in July,
but orders for capital goods were stronger than previously reported, pointing to robust business spending at the start of the third quarter.

Factory goods orders tumbled 3.3 percent amid a slump in demand for transportation equipment, the Commerce Department said on Tuesday. That was the biggest drop since August 2014. June's data was revised to show orders rising 3.2 percent instead of the previously reported 3.0 percent surge.

Economists had forecast factory orders declining 3.3 percent in July. Manufacturing, which makes up about 12 percent of the U.S. economy, is strengthening even as the boost from oil
and gas drilling is starting to fade as ample supplies restrain crude oil prices.

Tuesday's report also showed orders for non-defense capital goods excluding aircraft - seen as a measure of business spending plans - increased 1.0 percent in July instead of gaining 0.4 percent as reported last month.

Orders for these so-called core capital goods slipped 0.1 percent in June. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic
product report, jumped 1.2 percent instead of the previously reported 1.0 percent rise.

In July, orders for machinery fell 0.9 percent after gaining 0.5 percent in June. Mining, oil field and gas field machinery orders rose 1.7 percent after climbing 2.5 percent in June.

Orders for transportation equipment sagged 19.2 percent, the biggest drop since August 2014. That reflected a 70.8 percent dive in civilian aircraft orders. Boeing has reported on its website that it received only 22 aircraft orders in July, sharply down from 184 in the prior month.

Motor vehicle orders fell 0.9 percent after being unchanged in June. Motor vehicle production has slumped in recent months as declining sales left manufacturers with an inventory
overhang.

Production could get a boost from an anticipated spike in demand for automobiles as residents in storm-ravaged Texas replace flood-damaged vehicles.