U.S. factory orders contracted 3.7 percent in April, following a 3.4 percent advance in March (revised from 4.3 percent). The monthly decline was larger than expectations of a 3.0 percent drop in the Econoday survey of forecasters.

In March, manufacturers had rushed to ship goods ahead of the implementation of tariffs in April, boosting orders. Therefore a retreat in April was to be expected, although it was larger than expected. The decrease was consistent with an already reported 6.3 percent drop in durable goods orders. Nondurable goods orders were down 0.9 percent in April.

New manufacturing orders excluding transportation declined another 0.5 percent in April, the same as in March. Orders excluding defense were down 4.2 percent after rising 3.9 percent the previous month. Unfilled orders dropped 8.0 percent after surging 10.1 percent.

Manufacturers' shipments were down a further 0.3 percent after contracting 0.2 percent in March. Excluding transportation, shipments fell 0.6 percent on the month.

After the big 6.3 percent drop in durable goods orders already reported for April, largely due to falling aircraft orders, forecasters see factory orders down 3.0 percent.

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.