Key facts
- New orders for U.S. factory goods decreased by 0.3% in June.
- This decline was unexpected, as economists had predicted a 0.2% increase.
- Orders for computers and electronic products saw a significant jump of 3.2%.
- Orders for non-defense capital goods excluding aircraft, a measure of business spending, rose 1.2%.
New orders for U.S. factory goods unexpectedly declined by 0.3% in June, missing economists' forecasts for a 0.2% rebound. This marks a continuation of a downward trend, following a revised 1.1% decrease in May. Despite the overall dip, orders saw a 5.3% increase year-over-year.
Manufacturing, which constitutes 9.4% of the U.S. economy, is receiving support from the ongoing buildout of artificial intelligence infrastructure. Businesses are also front-loading orders to mitigate potential shortages and price increases stemming from geopolitical tensions, including the U.S.-Israeli war with Iran.
Specific sectors showed mixed performance. Orders for defense aircraft and parts fell 7.2%, and there was a substantial 27.2% plunge in orders for mining, oil field, and gas field machinery. However, overall machinery orders rose by 0.3%.
Orders for computers and electronic products surged by 3.2%, contributing to a 13.9% year-on-year increase in this category. Electrical equipment, appliances, and components also saw a 1.6% rise. Orders for primary metals, motor vehicles, parts, trailers, and commercial aircraft and parts also increased.
Furthermore, orders for non-defense capital goods excluding aircraft, a key indicator of business spending plans on equipment, increased by 1.2% in June, exceeding the initial estimate of 0.9%. Shipments of these core capital goods rose 2.0%, slightly above the previously reported 1.9%. Business spending on equipment had previously shown robust growth in the second quarter.