As expected, a drop in new orders for aircraft cut into overall factory orders in June. Boeing commercial aircraft orders have been seesawing in the past few months, adding volatility to data on the factory sector. In June, Boeing orders totaled 116, a decline of 187 from 303 in May which was an increase of 295 from the prior month. Outside of the transportation sector and the oversize influence of aircraft orders, new orders for factory goods are little changed in June.

The dollar value of new orders for all factory goods is down 4.8 percent in June from May after an increase of 8.3 percent in May from April. The June decline is close to the consensus of down 5.0 percent in the Econoday survey of forecasters. The main source of the June drop in orders is a 22.4 percent fall in transportation where orders are down 0.7 percent for motor vehicles, 51.8 percent for nondefense aircraft, and 20.0 for ships and boats. Defense aircraft orders are up 5.0 percent in June. Excluding transportation, total orders are up 0.4 percent in June after up 0.3 percent in May.

New orders for durable goods plunge 9.4 percent in June after an increase of 16.5 percent in May. The snapback in aircraft orders puts total durable orders excluding aircraft up 0.2 percent in June. Orders for electrical equipment are up 2.4 percent in June, primary metals are up 0.6%, fabricated metals up 0.1 percent, and machinery up 0.3 percent.

New orders for nondurable goods is up 0.5 percent in June after a scant increase of 0.1 in May. Much of the June increase reflects rises of 0.4 percent rise in food products and 1.5 percent in beverages and tobacco. Petroleum and coal products are up 1.4 percent in June from the prior month.

Unfilled orders are up 1.0 percent in June after an increase of 3.4 percent in May. Most of the increase in unfilled orders is from the transportation component which is up 1.6%. Excluding transportation, unfilled orders are flat and suggest little demand in the pipeline to support activity going forward.

Orders seen down 5.0 percent in June reflecting a 9.3 percent plunge in durable goods orders reported last week for June. Volatile aircraft orders continue skewing the report.

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.