WASHINGTON (REUTERS) - New orders for US-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 per cent amid a slump in demand for transportation equipment, the Commerce Department said on Tuesday (Sept 5). That was the biggest drop since August 2014. June's data was revised to show orders rising 3.2 per cent instead of the previously reported 3.0 per cent surge.
Economists had forecast factory orders declining 3.3 per cent in July. Manufacturing, which makes up about 12 per cent of the US 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 per cent in July instead of gaining 0.4 per cent as reported last month.
Orders for these so-called core capital goods slipped 0.1 per cent in June. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, jumped 1.2 per cent instead of the previously reported 1.0 per cent rise.
In July, orders for machinery fell 0.9 per cent after gaining 0.5 per cent in June. Mining, oil field and gas field machinery orders rose 1.7 per cent after climbing 2.5 per cent in June.
Orders for transportation equipment sagged 19.2 per cent, the biggest drop since August 2014. That reflected a 70.8 per cent 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 per cent 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.