Factory orders, which had been on a 3-month winning streak, fell back 2.4 percent in July in a decline, however, that is less severe than the Econoday consensus for a 3.4 percent decline. The good news is that the decline is centered in transportation equipment, specifically aircraft. Excluding transportation, new orders rose 1.2 percent.
Durable orders came in at minus 7.4 percent which is 1 tenth more severe than the initial estimate issued last week. The surprise in the report is a big bounce back in non-durable orders which, boosted by price effects for petroleum and coal, jumped 2.4 percent vs the prior month's 0.5 percent decline.
Some order readings are solid including a gain for construction materials and even motor vehicles. Consumer goods in general show a rise but not capital goods where the core reading, which excludes aircraft, fell a sharp 4.0 percent which points to uncertainty regarding business investment.
Other readings include a strong rise for total shipments that points to a good start to third-quarter GDP and a small rise in inventories. Unfilled orders rose slightly which is another positive.
Swings in aircraft make for monthly volatility in factory data, excluding which today's report in general, together with anecdotal reports on the sector including Tuesday's ISM report, point to steady gains for the sector.
Market Consensus before announcement
Factory orders, up 1.5 percent, were solid in June though down from an especially strong May which was revised upward to 3.0 percent. But the gains were narrow and tied mostly to aircraft and some to autos, excluding which orders fell 0.4 percent. More recently, new factory orders for durables in July dropped a huge 7.3 percent after jumping 3.9 percent the month before.