Factory Orders in U.S. Drop 3.3% During July

Orders in U.S. factories plunged by 3.3% during July, after being pulled down by a steep fall in demand for civilian aircraft.

On Tuesday, the U.S. Department of Commerce said that orders in U.S. factories were down 3.3% during July, following a gain of 3.2% in June. The drop in July was due for the most part because of a drop of 19.2% in orders that were part of the highly volatile category of transportation equipment.

Civilian aircraft orders, which vary often times quite wildly from one month to another, fell by almost 71% during July after they gained over 129.3% the previous month.

Excluding the volatile transportation sector, which includes orders for aircraft, orders in U.S. factories increased by 0.5% during July following a tiny increase of 0.1% the previous month.

A category considered by economists as a proxy for investment by business posted a solid gain of 1% following a small decline during June of just 0.1%.

Of recent, manufacturing in the United States has benefitted from the strength of the U.S. dollar against a basket of foreign currencies and from the improvement over all of the global economy.

Growth has started to pick up across Japan, Europe and other areas of the developing world.

Despite this sharp drop in overall factory orders, an increase seen in the category of business investment suggests that companies have become optimistic about the demand in the future from their customers.

Last week a private survey showed that factories in the United States had grown at a strong pace during August, another positive sign for the country’s overall economy.

Orders for electronics products and computers increased by 2.1% and orders for appliances, components and electrical equipment also were up by 2.6%. Orders for autos as well as auto parts were down by 0.9%.

Durable goods orders are orders for goods that are meant to least a minimum of three years. Durable goods’ orders were down over 6.8% following a June surge of more than 6.4%.

Business optimism however appears to be strong as the investment by businesses increases and therefore will help to increase the overall factories orders as inventories will continue to be built back up to prior levels and if the jobs market continues to remains strong, then more money will be spent by consumes as they feel more optimistic about their current and future situations.