Factory orders, where swings are common due to lumpy orders for aircraft, fell 2.1 percent in July to nearly reverse June's 2.3 percent rise. July's split between the report's two main components shows a 1.1 percent rise for nondurable goods -- the new data in today's report -- and a 5.2 percent decline for durable orders which is unrevised from last week's advance reading.

Commercial aircraft orders (nondefense aircraft and parts) fell 43.6 percent in July following jumps of 71.1 and 33.4 percent in the two prior months. Orders for defense aircraft, which is a much smaller category, fell 10.9 percent in July.

Orders for machinery, lifted by mining and energy equipment, were a big positive in July's data, rising 1.2 percent on the month to more than reverse June's 0.5 percent fall. Yet this was not enough to lift core capital goods, a very closely watched reading for indications on business investment and which remains flat, up only 0.1 percent on the month (unrevised from last week's advance data) following a 0.4 percent fall and a 0.4 percent rise in June and May. Orders for information technology as well as for computers and related products, which like machinery feed into the core capital group, fell 0.5 and 2.2 percent respectively. Shipments for core capital goods fell 0.3 percent in July to get fixed business investment off to a slow third-quarter start.

Unfilled orders, fed by aircraft, are a major plus for manufacturing, up 0.5 percent in June on top of 1.8 percent and 0.8 percent builds in the two prior months: These are very big increases and a positive for factory employment. Total July shipments climbed a strong 0.5 percent while inventories remained flat, up 0.1 percent in July following 0.2 percent draws in the two prior months.

Though strength is narrowly focused in aircraft, the nation's factory sector is doing reasoinably well and much better than indications from the host of business surveys including persistent and sizable contraction as indicated by the ISM manufacturing report, data perhaps that aren't fully capturing aircraft's contribution.

Today's results are better than expected and leave Econoday's Consensus Divergence Index at plus 22 to indicate noticeable outperformance of recent US data relative to forecasts.

Factory orders are expected to fall 2.6 percent in July versus June's 2.3 percent rise. Durable goods orders for July, which have already been released and are one of two major components of this report, fell back 5.2 percent on the month.

Factory orders represent the dollar level of new orders for both durable and nondurable goods. This report gives more complete information than the advance durable goods report which is released one or two weeks earlier in the month.

Investors want to keep their fingers on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth which is less likely to cause inflationary pressures. By tracking economic data like factory orders, investors will know what the economic backdrop is for these markets and their portfolios. The orders data show how busy factories will be in coming months as manufacturers work to fill those orders. This report provides insight to the demand for not only hard goods such as refrigerators and cars, but nondurables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production. All in all, this report tells investors what to expect from the manufacturing sector, a major component of the economy and therefore a major influence on their investments.