Weak commercial aircraft bookings weigh on US factory orders in July

New orders for U.S.-manufactured goods fell in July, pulled down by weakness in commercial aircraft bookings, but businesses appeared to have maintained a strong pace of spending on equipment early in the third quarter.

Factory orders decreased 1.3% after an unrevised 4.8% drop in June, the Commerce Department's Census Bureau said on Wednesday. Economists polled by Reuters had forecast factory orders declining 1.4%. Orders advanced 3.5% on a year-on-year basis in July. 

Manufacturing has been hobbled by tariffs on imports, with the Institute for Supply Management's manufacturing PMI contracting for the sixth consecutive month in August. A U.S. appeals court ruled last Friday that most of President Donald Trump's tariffs were illegal, creating more uncertainty for businesses. 

Commercial aircraft orders dropped 32.7% in July. Orders for motor vehicles, parts and trailers rebounded 1.9%. Orders for computers and electronic products rose 0.5%, while those for electrical equipment, appliances and components surged 1.9%. Machinery orders advanced 1.9%.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, jumped 1.1% in July as estimated last month. 

Shipments of these so-called core capital goods gained 0.7% as reported last month. Business spending on equipment grew solidly in the second quarter, contributing to the economy's 3.3% annualized growth rate during that period.