U.S. factory orders likely to have dropped in July on decline in aircraft orders – Wells Fargo

U.S. factory orders had risen in June by 3 percent, owing to a sharp increase in aircraft bookings. It was the biggest gain in eight months. The aircraft surge raised overall durables 6.4 percent, its biggest sequential rise since July 2014. It was a jump in aircraft orders in 2014 that led to the surge then too.

The record surge in July 2014 was followed by a record drop in August 2014 when durables fell 18.4 percent on the month. Similarly, factory orders are expected to contract in July 2017 by 3.2 percent as aircraft orders dropped on the month, noted Wells Fargo in a research report.

Purchasing manager surveys have dropped a few points in recent times; however, most continue to be firmly in expansion territory.

“On that basis, we take the back-to-back declines in nondurable goods with a grain of salt, but will also be wary if July brings a surge on the nondurable side”, stated Wells Fargo.

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