New orders for U.S. manufactured goods extended their slump in July, falling 1.3% after a 4.8% decline in June, primarily driven by a 2.8% drop in durable goods orders due to transportation equipment. Although the overall decrease was marginally less than anticipated, it signals persistent weakness in manufacturing demand. Conversely, shipments of manufactured goods increased by 0.9% and inventories rose by 0.3%, leading to a slight reduction of the inventories-to-shipments ratio to 1.56.
U.S. factory orders demonstrated a continued, albeit moderating, slump in July, falling 1.3% after a significant 4.8% plunge in June. This decline was slightly less severe than the 1.4% consensus forecast. The weakness remains concentrated in durable goods, which dropped 2.8%, driven by a persistent nosedive in orders for transportation equipment. In contrast, the report contained positive underlying signals: orders for non-durable goods rose 0.3%, and more importantly, shipments of manufactured goods accelerated, increasing by 0.9%. This robust shipment growth outpaced the modest 0.3% rise in inventories, leading to a favorable reduction in the inventories-to-shipments ratio from 1.57 to 1.56. This suggests that despite weakening forward-looking demand signals, manufacturers are effectively managing and clearing existing inventory, which could support near-term margins and cash flow.
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