U.S. factory orders drop in July on defense aircraft

New orders for U.S.-manufactured goods unexpectedly fell in July, weighed down by a plunge in defense aircraft bookings, but the overall manufacturing industry remains resilient.

The Commerce Department said on Friday that factory orders dropped 1.0% in July after increasing 1.8% in June.

Economists polled by Reuters had forecast factory orders would increase 0.2%. Orders increased 13.4% on a year-on-year basis in July.

The Institute for Supply Management said on Thursday manufacturing grew steadily in August as employment and new orders rebounded. July’s factory orders were mixed. Orders for computers and electronic products increased 0.8%. Orders for electrical equipment, appliances and components fell 1.2%.

There was also 0.7% drop in orders for transportation equipment, which reflected a 49.7% plunge in orders for defense aircraft and parts. Orders for machinery rose as did those for fabricated metal products.

The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, rose 0.3% in July instead of 0.4% as reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.5% in July instead of 0.7% as previously reported.