Factory orders rose for a fourth month in July at a 1.3% pace following a higher revision to June that saw a gain of 0.9%. Economists on average expected a large increase of 2.2%. Growth was mainly seen in a 9.7% rise in capital goods, while defense spending increased at a volatile 16.3% rate following a larger decline in the prior month. Orders of durable good rose sharply by 5.1% with transportation leading at 18.5% as the cash-for-clunkers program began. Ultimately, the ratio of inventory to shipments showed improvement with a slight decline to 1.40, the lowest in at least eight months.
Concern still lingers as to whether this trend will continue. With auto purchase incentives no longer in effect and tax cuts already initiated, it remains to be seen whether the economy has received the boost it needs. Markets showed little reaction to the release as earlier data, including worse-than-expected job losses according to ADP and loan data from the Mortgage Bankers Association, set the tone for continued selling. Other markets meanwhile have commodities trading lower as slowdown in Chinese lending risks growth. Currencies remain mixed with dollar gaining against the euro, pound and Canadian dollar, while the Japanese yen moved significantly higher on risk aversion.