Factory Orders Decline 0.2% During July

Orders to U.S. factories for manufactured goods edged down in July for the first time in six months, due largely to a 6.8% fall in defense orders, the government said Tuesday.

The Commerce Department said orders dropped off by 0.2% to $204.9 billion. It was the first monthly decline since January, when the new tax law depressed factory orders by 5.3%

Construction spending also dipped 0.2% in July, the second consecutive monthly decline, as weakness in apartment building and many non-residential sectors continued to depress building activity, the government said.

Construction spending totaled a seasonally adjusted $391.8 billion in July, down $600 million from the June level, when spending had fallen an even sharper 1.3%.

Excluding defense, factory orders inched up by 0.1%, the sixth consecutive monthly increase, and many economists took the consistent rise in civilian orders as a good sign.

” We have finally reached the stage where the dollar has fallen enough to make U.S. manufacturing competitive,” said David Wyss, chief economist of Data Resources Inc., a Lexington, Mass., forecasting firm.

Orders for non-durable goods inched up 0.2% to $96.4 billion in July after a 2% increase in June.

That was more than offset, however, by orders for durable goods. Big ticket items expected to last three or more years fell 0.6% to $108.5 billion in July. Durable goods orders were up 2% in June.

Meanwhile, back-to-back monthly declines in construction spending provided further evidence that the construction industry is being hurt this year by widespread overbuilding and the adverse effects of the new tax law, which eliminated many real estate tax shelters.