Factory orders surged 3.0 percent in June but were skewed higher by a more than doubling in monthly aircraft orders. Excluding transportation equipment, a reading that excludes aircraft, orders actually fell 0.2 percent in the month following a 0.1 decline in May and no change in April. June orders for capital goods (nondefense ex-aircraft) were also weak, unchanged in the month.
Shipments fell 0.2 percent while inventories rose 0.2 percent, lifting the inventory-to-shipment ratio to a less lean 1.38. A major positive in today’s report is a 1.3 percent surge in unfilled orders which had been flat but are now getting a lift from transportation equipment as well as capital goods industries including machinery and fabrications.
Turning to nondurable goods, orders slipped 0.3 percent on declines for petroleum and coal. Aircraft are an important part of the factory sector and have been a big plus so far this year, yet outside aircraft, the sector is still struggling to get in the air this year.
The consumer is weak for the second month. This report is for June. Thus, it will feed into GDP revisions for the second quarter.
Mike “Mish” Shedlock