Despite continued strength in the transportation sector, new U.S. factory orders showed an unexpected drop in June, reversing a smaller than previously reported increase in May.
According to figures released Thursday by the Commerce Department, new orders for manufactured goods decreased by $2.1 billion or 0.5 percent in June. With the decrease, factory orders fell in three of the last four months.
The drop in factory orders came as a surprise to economists, who had been expecting orders to increase by about 0.7 percent.
Additionally, the report showed that May figures were downwardly revised to show a 0.5 percent increase compared to the 0.7 percent growth initially reported.
Transportation orders, particularly orders for aircraft, ships and boats, continued to buoy the overall level of factory orders in June, coming in 8 percent above May levels.
However, non-transportation manufacturing orders saw a 1.8 percent decline, the largest monthly decrease since March of 2009.
As in May, much of the increase in transportation orders can be attributed to the maritime and aviation sectors, where the high costs of individual ships and aircraft can make month-to-month figures extremely volatile.
New orders for defense aircraft and parts posted a 22.6 percent increase, while civilian aircraft and parts orders were up 14.2 percent. Orders for ships and boats came in a whopping 223.5 percent above May levels.
However, new orders for motor vehicle bodies, parts and trailers, a less volatile segment of the transportation sector, were down 0.7 percent.
Excluding defense spending, factory orders fell 1.5 percent in June.
Durable goods orders, also boosted by the transportation sector, posted a 1.3 percent increase in June, while non-durable goods orders fell by 2 percent.
Orders for primary metals increased in June, but orders for machinery, computers, electrical equipment and appliances were all down for the month.
Capital goods orders, which were strong in May, continued to increase, rising by 6.6 percent overall.
Orders for non-defense capital goods excluding aircraft, which is seen as an indicator of business spending, fell by 1.7 percent in June following a 2.3 percent increase in May.
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