US factory orders drop in July on defence aircraft

NEW orders for US-manufactured goods unexpectedly fell in July, weighed down by a plunge in defence aircraft bookings, but the overall manufacturing industry remains resilient.

The Commerce Department said on Friday (Sep 2) that factory orders dropped 1.0 per cent in July after increasing 1.8 per cent in June.

Economists polled by Reuters had forecast factory orders would increase 0.2 per cent. Orders increased 13.4 per cent on a year-on-year basis in July.

The Institute for Supply Management said on Thursday manufacturing grew steadily in August as employment and new orders rebounded. July’s factory orders were mixed. Orders for computers and electronic products increased 0.8 per cent. Orders for electrical equipment, appliances and components fell 1.2 per cent.

There was also 0.7 per cent drop in orders for transportation equipment, which reflected a 49.7 per cent plunge in orders for defence aircraft and parts. Orders for machinery rose as did those for fabricated metal products.

The Commerce Department also reported that orders for non-defence capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, rose 0.3 per cent in July instead of 0.4 per cent as reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.5 per cent in July instead of 0.7 per cent as previously reported. REUTERS