Factory orders fell 3.3 percent in June reflecting steep declines for both commercial and defense aircraft, which are often volatile categories. When excluding aircraft as well as other transportation equipment, orders edged 0.1 percent higher and in the best news of the report, orders for core capital goods (nondefense ex-aircraft) recovered from recent weakness with a 0.9 percent jump (revised a tenth lower from last week's advance durables report). Durables as a whole fell 6.7 percent on the month (revised from last week's 6.6 percent) with nondurables, the new data in today's report, edging 0.1 percent lower.

Details are led by the capital goods groups: machinery orders up 1.5 percent led by construction and mining & oilfield equipment; computers and electronic products up 0.6 percent to extend a run of solid gains; and electrical equipment up 1.2 percent. Again, transportation equipment brought up the rear with a 20.6 percent decline.

Airlines were not only cancelling new orders for aircraft but for unfilled orders as well which as a whole fell a steep 1.4 percent in the month. Total shipments rose 0.5 percent in June with total inventories unchanged.

Factory data have at best been mixed of late, evident in this report but likely more than not with a downside bias. Though no surprise, today's steep headline decline was slightly deeper than expected and leaves Econoday's Relative Performance Index at minus 30 to indicate that recent US data, on net, are tangibly underperforming relative to what have been moderating expectations.

Factory orders are expected to fall 3.0 percent in June versus May's 0.5 percent decline. Durable goods orders for June, which have already been released, plunged 6.6 percent on aircraft cancellations.

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.