Factory Orders Drop in August

New orders at U.S. factories fell unexpectedly in August after a sharp drop in demand for civilian aircraft, government data showed Monday. But excluding transport, the data showed reasonable strength.

The Commerce Department said factory orders shrank 0.1% in August, posting the first decline in four months after gaining a revised 1.7% in July. July was originally reported as rising 1.3%.

Wall Street had forecast orders to grow 0.1% after modest August readouts from surveys of purchasing managers amid soaring oil prices.

Civilian aircraft orders, often a volatile series, declined 42.9% after a 103.5% surge the previous month. But excluding transportation, the numbers were up 1.3%, adding to recent forward-looking indicators that signaled the underlying tone for factory activity remained healthy in the third quarter.

“Capital spending is on the rise and will make a meaningful contribution in the third quarter,” said Joe LaVorgna, chief U.S. fixed income economist at Deutsche Bank Securities.

The Institute for Supply Management’s manufacturing index dipped slightly to 58.5 in September from 59.0 a month earlier, according to data released Friday.

That was the index’s lowest level in nearly a year but still marked the 16th straight month of expansion. Numbers above 50 indicate expansion and below 50 contraction.

Commerce Department data showed that aircraft-led demand for durable goods -- big ticket items meant to last three years or more -- fell a revised 0.3% in August compared with a 1.9% gain in July. This was slightly better than the 0.5% decline reported Sept. 24.

Nondurable goods, which make up a bit less than half of all factory orders, were up 0.2% after a revised 1.3% gain in July. This was initially reported as a 1.0% rise.

Factory inventories were up 0.5% in August, the data showed. The inventories-to-shipments ratio, an indication of how fast inventories would run empty at the current pace of shipment, was unchanged at 1.23 months.