Factory Orders Growth at Half of Expectations

Dow Jones (Wall Street Journal) and Bloomberg alike had their consensus estimates pegged at a gain of 0.9%. This compared with a preliminary report of 1.8% gain in June, which was then revised higher to 2.2%.

Shipments were down yet again, three times in the past four months, and fell by $0.8 billion, or 0.2%, to $483.6 billion. Unfilled orders rose $2.8 billion, or 0.2%, to $1.198 trillion. The unfilled orders-to-shipments ratio was 6.89, down from 6.92 in June.

Inventories were lower as well in July, following three consecutive monthly increases, falling by $0.6 billion, or 0.1%, to $651.2 billion.

New orders for manufactured durable goods in July increased by $5.1 billion, or 2.2%, to $241.7 billion. Transportation equipment led this increase with a gain of $4.4 billion, or by 5.5%, to $84.0 billion.

New orders for manufactured nondurable goods decreased by $3.1 billion (1.3%) to $240.3 billion. Shipments of manufactured durable goods in July rose by $2.4 billion (1%) to $243.3 billion, and transportation equipment gained by $2.3 billion (2.9%) to $80.7 billion.

Petroleum and coal products have been steadily falling. They were down yet again, by $3.7 billion (7.0%) to $48.9 billion.

While economists are looking for signs of strength, this is a July reading. It was weaker than the revised data from June, but it was also before the broad-based economic malaise from China started coming down fast.

It is still early on to decide if this will impact gross domestic product forecasts for the third quarter, particularly as this July data was for the first month of the third quarter.

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