US factory orders dip as aircraft dive

New orders at US factories fell unexpectedly in August after a sharp drop in demand for civilian aircraft, government data showed on Monday. But excluding transport, the data showed reasonable strength.
The Commerce Department said factory orders shrank 0.1 percent in August, posting the first decline in four months after gaining a revised 1.7 percent in July. This was originally reported as rising 1.3 percent.
The dollar and 10-year US government Treasury bonds were steady on the news, which analysts said was being overshadowed by more influential releases later this week including the September employment report.
Wall Street had forecast orders to grow just 0.1 percent after modest August readouts from surveys of purchasing managers amid soaring oil prices.
Civilian aircraft orders, often a volatile series, dived 42.9 percent after a 103.5 percent surge the previous month. But excluding transportation the numbers were up 1.3 percent, and this solid tone chimes with recent forward-looking indicators that signal the underlying tone for factory activity remained healthy in the third quarter.
"Capital spending is on the rise and will make a meaningful contribution in the third quarter," said Joe LaVorgna, chief US fixed income economist at Deutsche Bank Securities.
The Institute for Supply Management's manufacturing index dipped slightly to 58.5 in September from 59.0 a month earlier, according to data released on Friday.
That was the index's lowest level in nearly a year but still marked the 16th straight month of expansion. Numbers above 50 indicate expansion and below 50 contraction.
Commerce Department data showed that aircraft-led demand for durable goods - big ticket items meant to last three years or more - fell a revised 0.3 percent in August compared with a 1.9 percent gain in July. This was slightly better than the 0.5 percent decline reported on September 24.
Non-durable goods, which make up a bit less than half of all factory orders, were up 0.2 percent after a revised 1.3 percent gain in July. This was initially reported as a 1.0 percent rise.
Factory inventories were up 0.5 percent in August, Commerce said. The inventories-to-shipments ratio, an indication of how fast inventories would run empty at the current pace of shipment, was unchanged at 1.23 months.