Factory Orders Surge, Thanks to Airplane Orders

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Boeing 747The U.S. Commerce Department's report on factory orders for July was released on Wednesday, and the headline gain was a whopping 10.5%. Dow Jones had called for a gain of 11.0% and Bloomberg called for a gain of 10.9% for the month. The reason this number was so large is almost entirely due to aircraft orders from the annual airshow.

If you remove the volatile transportation and related equipment (aircraft and vehicles), then suddenly that gain disappears. Outside of transportation, the factory orders in July fell by 0.8%.

Shipments gained 1.2%, and there was a 1.4% gain for shipments of non-defense capital goods ex-aircraft. Unfilled orders were up by 5.4%, while inventories were up only 0.1%. There was a positive revision to June's orders, up to 1.5% from a prior reading of 1.1%.

This is one of those economic reports that just look very confusing to many economic watchers. The headline number looks massive, but it is negative if you back out the big-ticket transportation items from autos and planes. Still, one can only assume that this bodes well for third-quarter gross domestic product (GDP).

READ ALSO: 10 States Where Manufacturing Still Matters


Filed under: Economy
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