Key facts
- New orders for U.S. factory goods decreased by 1.3% in May.
- The decline was largely attributed to a significant drop in commercial aircraft bookings.
- Demand in other sectors, particularly those related to artificial intelligence, remained strong.
- Manufacturing activity continued to expand for the sixth consecutive month in June.
- Orders for core capital goods, a measure of business spending plans, rebounded by 1.4%.
New orders for U.S. factory goods declined by 1.3% in May, a reversal from a revised 5.3% increase in April, according to data from the Commerce Department's Census Bureau. The decrease was primarily driven by a substantial 51.8% drop in bookings for commercial aircraft, following a massive surge in April. Despite this setback, overall demand in other sectors remained resilient, bolstered by significant investments in artificial intelligence.
Manufacturing, which constitutes 9.4% of the U.S. economy, continues to show strength, supported by the AI spending boom. This has helped to offset the drag from other economic factors. An Institute for Supply Management survey indicated that manufacturing has been expanding for six consecutive months as of June.
Orders for computers and electronic products saw a modest increase of 0.2% in May, with a year-on-year rise of 13.0%. Machinery orders experienced a significant surge of 2.1%, and there were also notable gains in primary metals and fabricated metal products. While orders for electrical equipment, appliances, and components dipped slightly by 0.3%, they still showed a year-on-year increase of 6.2%.
Orders for non-defense capital goods excluding aircraft, a key indicator of business spending plans on equipment, rebounded by 1.4% in May, slightly revised from an earlier estimate of 1.6%. Shipments of these core capital goods saw a smaller increase of 0.1%, compared to the previously reported 0.3% rise.