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First Cut: New orders for factory goods rose in June, restrained by nondurables on lower petroleum prices

New orders for all factory goods in June were up 0.6% with a solid 1.9% increase in durables restrained by a modest 0.5% decline in nondurables. The dollar value of nondurable orders was reduced by falling prices for petroleum and chemicals. Durables increased on a 3.7% rise in transportation that was powered by a hefty 75.1% gain for nondefense aircraft. Excluding transportation, however, the increase was still a good 1.0% for durables. “Core” durables orders — durables less civilian aircraft and defense capital goods — were up 2.0% in June.

The report was only slight below market expectations and reflected more positive conditions for orders in June, although by no means assuring that recent softness was over.

Unfilled orders were down 0.7% in June, reflecting the continued cancellation of orders at Boeing for its 737 MAX aircraft. Unfilled orders for nondefense aircraft were down 0.8%, while the defense aircraft order backlog was down 2.1%.

Shipments of capital goods excluding aircraft — which can serve as a proxy for business fixed investment in GDP — is reflecting the Fed’s recent concerns about low business investment in the second quarter.

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