New orders for goods made stateside recorded their biggest drop in nearly three years in July, but orders for capital goods were stronger than previously reported, pointing to robust business spending at the start of the third quarter.
Figures released Tuesday by the U.S. Commerce Department showed factory goods orders tumbled 3.3% amid a slump in demand for transportation equipment, the biggest drop since August 2014. June's data was revised to show orders rising 3.2% instead of the previously reported 3% surge.
Economists had forecast factory orders declining 3.3% in July. Manufacturing, which makes up about 12% of the U.S. economy, is strengthening even as the boost from oil and gas drilling is starting to fade as ample supplies restrain crude oil prices.
Tuesday's report also showed orders for non-defense capital goods excluding aircraft - seen as a measure of business spending plans - increased 1% in July instead of gaining 0.4% as reported last month.
Orders for these so-called core capital goods slipped 0.1% in June. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, jumped 1.2% instead of the previously reported 1% rise.
