Rise in US factory orders beats expectations in July

WASHINGTON, Sept 2 (Reuters) - New ‌orders for U.S. ​factory ​goods increased more than expected in July amid a rebound in demand for aircraft.

Factory orders rose 0.9% after a ‌revised 0.2% drop in June, the Commerce Department's Census ⁠Bureau said on Wednesday. Economists polled by Reuters had forecast orders would rebound 0.6% ‌after a previously reported 0.3% ‌drop in June.

Orders advanced 6.5% on a year-over-year basis in July. Manufacturing, which accounts for 9.4% of the economy, is getting ​a tailwind from the artificial intelligence buildout, though the six-month U.S.-Israeli war with Iran is straining supply chains and keeping input prices ⁠elevated. An Institute for Supply Management survey on Tuesday showed manufacturers grumbling about higher prices in ​August because of the war and import tariffs, with some describing the economy as "annoying."

The rebound in factory orders ​in July was led by a 12.7% ‌surge in orders for civilian aircraft and parts. Orders for motor vehicle bodies, parts and trailers rose ⁠0.4%. Machinery orders increased 0.8%. Orders for computers and electronic products dropped 1.1%, but were up 14.3% year over year. Orders for electrical equipment, appliances ⁠and components fell 0.3%.

The Census Bureau also reported that orders for non-defense capital goods ​excluding aircraft, which are seen as a measure of business spending plans on equipment, were unchanged in July rather than up 0.2%, as reported last week.

Shipments ‌of these so-called core capital goods increased 1.2% instead of the initially estimated 1.4%.

The slowdown in core ‌capital goods orders in July is likely temporary. The government last week ⁠reported a surge in capital ‌goods imports in July. ​The AI spending frenzy is also fueling imports and business spending on equipment.

(Reporting by Lucia Mutikani; Editing by ‌Paul Simao)

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