Factory orders fell 3.6 percent in December reflecting an aircraft-driven decline in durables orders (down 6.2 percent in today's second estimate versus 6.1 percent in last week's first estimate). Orders for nondurables fell 1.1 percent in what is the first estimate for this category and where details are not provided.

Orders for core capital goods orders (nondefense ex-aircraft) were unchanged in January, down marginally from a 0.1 percent increase in the first estimate and following a 0.6 percent decline in December. This reading has only risen once since August last year and confirms the Federal Reserve's cautious assessment of US business investment.

Orders for commercial aircraft (nondefense aircraft and parts) fell 58.9 percent in the month following a 1.0 percent rise in December and an 84.1 percent surge in November. This reading bears close watching for the health of US manufacturing given Boeing's emerging quality troubles. Unfilled orders for commercial aircraft slowed to a 0.6 percent gain in January from a long string of strong gains in prior months including 3.3 and 3.2 percent in December and November.

Total unfilled orders managed only a 0.2 percent gain in January while inventories held flat, edging 0.1 percent lower. Total shipments fell 1.0 percent on top of December's 0.5 percent decline.

The outlook for US manufacturing is uncertain given the weakness of recent data. In fact, US economic data as a whole have begun to come in below expectations as tracked by the Relative Performance Index which is at minus 33, an emerging trend perhaps and something to watch in the days leading up to Friday's employment report.

Factory orders are expected to fall 3.0 percent in January after December's very modest 0.2 percent gain. Durable goods orders for January, which have already been released and are one of two major components of this report, fell 6.1 percent on the month due to a swing lower in aircraft orders.

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.