WASHINGTON (AP) – Orders to US factories increased in July by the largest amount in nine months, propelled by a big jump in demand for commercial aircraft. Excluding transportation orders, which are often volatile month-to-month, durable goods increased 1.3%, revised down on Friday from the 1.5% print initially reported.
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US factory orders rose in July following two consecutive monthly decreases, increasing by 1.9% month-on-month (consensus: 1.9%) to reach $454.8bn, according to the US Department of Commerce. These so-called core capital goods are seen as a measure of business confidence and spending plans on equipment. Orders for nondurable goods such as chemicals and paper dropped 0.5 percent in July after rising 0.8 percent in June.
The Institute for Supply Management reported on Thursday that its national factory activity index fell into contraction territory in August for the first time in six months.
The data overall maintains expectations of stabilisation in the manufacturing sector with very tentative signs of recovery and there will also be relief that overall exports strengthened to ten-month highs for July, although the advance was led by gains in food exports rather than the manufacturing sector. In addition, a USA inventory correction has resulted in factories receiving fewer orders. With support for this view, demand for equipment in oil rose for the third month. Orders for computers and electronic products rose 3.4 per cent, the largest rise since March 2015. Shipments slipped 0.2 per cent.
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The Commerce Department said the inventories-to-shipments ratio came in at 1.35 in July, unchanged from the previous month.
