EmailFactory orders fell 0.2% in August after increasing a downwardly revised 2.1% (from 2.4%) in July. The Briefing.com consensus expected factory orders to fall 0.1%.
Durable goods orders were unchanged from the advance release, declining 0.1% in August after increasing 4.2% in July. Nondurable goods orders fell 0.3% after increasing a downwardly revised 0.4% (from 1.0%) in July.
A second month of strong aircraft sales was more than offset by weaker demand for primary and fabricated metals.
The decline in nondurable goods was mainly due to a 2.5% drop in orders for petroleum and coal products. This is due most likely to the recent slide in oil prices and not from a drop in the quantity demanded.
Business investment demand was slightly weaker than the advance durables report originally revealed. Orders of nondefense capital goods increased 0.9% in August, down from a 1.1% increase in the advance release. The effect on GDP, however, should be minimal. Shipments, which factor directly into GDP, were unchanged from the advance data.
In contrast to the ISM report, order backlogs remained a source of strength for manufacturers. The ISM Index remained in an expansion mode due to companies paring back their order backlogs. That was not the case in the hard data. Unfilled orders increased 0.9% for the second consecutive month, signaling that the sector has plenty of backorders to support production in the case of a drop-off in new orders.
