US Factory Orders Fall 1.3% In July Amid Transportation Decline

U.S. factory orders fell 1.3% in July 2025, continuing a sharp decline following a 4.8% drop in June, largely due to a steep decrease in transportation equipment orders, particularly nondefense aircraft which dropped 32.7% amid a post-tariff front-running slowdown. Durable goods orders declined 2.8%, while nondurable goods orders rose modestly by 0.3%. Shipments of manufactured goods increased by 0.9%, outpacing inventory growth which rose 0.3%, resulting in a slightly lower inventories-to-shipments ratio. The decline in factory orders reflects the lingering effects of a May surge driven by companies front-loading purchases ahead of tariffs, which had caused an 8.3% jump—the second biggest monthly increase in nearly seven decades. Despite the hard data showing weakness in July, softer manufacturing data for August suggest a potential improvement. Economists' expectations of a 1.4% drop closely matched the actual declines reported, highlighting ongoing challenges in the manufacturing sector.