Rise in US factory orders beats expectations in July

In July, factory orders in the United States saw a significant increase, surpassing expectations set by economists. The Commerce Department's Census Bureau reported that new orders for U.S. factory goods rose 0.9% from the previous month, following a revised 0.2% drop in June. Economists had anticipated a 0.6% increase in factory orders after a previously reported 0.3% decline in June.

The manufacturing sector, which contributes 9.4% to the economy, benefited from a surge in demand for aircraft. Orders for civilian aircraft and parts surged by 12.7% in July. Orders for motor vehicle bodies, parts, and trailers also increased by 0.4%, while machinery orders rose by 0.8%. However, orders for computers and electronic products fell by 1.1%, though they were up 14.3% compared to the previous year. Orders for electrical equipment, appliances, and components declined by 0.3%.

The Census Bureau also revealed that orders for non-defense capital goods, excluding aircraft, remained unchanged in July. These core capital goods, which are considered a measure of business spending plans on equipment, saw an increase of 1.2% instead of the initially estimated 1.4%. The slowdown in core capital goods orders is likely temporary and may be attributed to the surge in capital goods imports in July, fueled by the artificial intelligence spending frenzy and business spending on equipment.