Oil Spurs 1.8% Rise in August Factory Orders

Factory orders unexpectedly climbed 1.8% in August to a seasonally adjusted $244.6 billion, the Commerce Department said today, as petroleum refiners benefited after the Aug. 2 Iraqi invasion of Kuwait that sent world energy prices soaring.

The increase in total August orders was not foreseen by Wall Street economists, who had forecast a 0.5% drop in August orders after a revised 1.5% gain in July.

The department said the August increase was mainly due to the petroleum refining industry, which had substantial price increases that pushed up the total value of orders during the month.

Excluding petroleum, total orders rose 0.6% in August.

Shipments of petroleum and coal products rose by about $3 billion during August from July levels, department officials said. In percentage terms, these shipments shot up by 24.5% after a 0.4% July increase and were a major factor in pushing up the dollar value of August orders.

A key component of factory orders, durable goods, fell 0.5% in August after rising 2.7% in July. Durable goods are items such as refrigerators and automobiles designed to last at least three years.

Orders for durable goods account for about half of the factory orders index, so any change in volume strongly affects the monthly figures.

Transportation equipment orders were up 1.8% in August after gaining 4.6% in July. But within that category, orders for aircraft and missiles dropped by 22% in August after rising 21.9% in July.

The overall 1.5% increase in July orders was revised from a previously reported increase of 1.6%.