US factory orders fall in May, weighed down by weak demand for commercial aircraft

[WASHINGTON] New orders for US factory goods fell in May amid a decline in bookings for commercial aircraft, but demand elsewhere remained strong, partly driven by investment in artificial intelligence.

Factory orders dropped 1.3 per cent after an upwardly revised 5.3 per cent jump in April, the Commerce Department’s Census Bureau said on Thursday (Jul 2). Economists polled by Reuters had forecast orders declining 1.8 per cent after a previously reported 4.8 per cent surge in April.

Orders increased 5.1 per cent year-on-year in May. Manufacturing, which accounts for 9.4 per cent of the economy, remains supported by the AI spending boom, which has limited the drag from the US-Israeli war with Iran.

An Institute for Supply Management survey on Wednesday showed manufacturing expanding for a sixth straight month in June. Commercial aircraft orders dropped 51.8 per cent after soaring 167.4 per cent in April. Boeing reported on its website that it had received 27 aircraft orders in May compared with 136 in April.

Orders for computers and electronic products rose 0.2 per cent and were up 13.0 per cent year-on-year. Machinery orders surged 2.1 per cent. There were also big gains in orders for primary metals and fabricated metal products. Though orders for electrical equipment, appliances and components slipped 0.3 per cent, they increased 6.2 per cent year-on-year.

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, rebounded 1.4 per cent in May instead of 1.6 per cent as estimated last week. Shipments of these so-called core capital goods edged up 0.1 per cent, instead of rising 0.3 per cent as previously reported. REUTERS