November 2, 2018 / 2:08 PM / 16 days ago

U.S. factory orders increase more than expected in September

WASHINGTON (Reuters) - New orders for U.S.-made goods increased more than expected in September, but softening business spending on equipment suggested the manufacturing sector could be slowing.

FILE PHOTO - A production line employee works at the AMES Companies shovel manufacturing factory in Camp Hill, Pennsylvania, U.S. on June 29, 2017. REUTERS/Tim Aeppel?

Factory goods orders rose 0.7 percent amid strong demand for transportation equipment, the Commerce Department said on Friday. Data for August was revised up to show factory orders surging 2.6 percent instead of the previously reported 2.3 percent increase.

Economists polled by Reuters had forecast factory orders gaining 0.5 percent in September. Orders increased 8.4 percent on a year-on-year basis in September.

Worker shortages, an increasingly bitter trade war between the United States and China, a strong dollar and slowing global economic growth are restraining momentum in manufacturing, which accounts for about 12 percent of the U.S. economy.

An Institute for Supply Management survey of manufacturers published on Thursday showed a measure of new factory orders dropping to a 1-1/2-year low in October.

In September, orders for transportation equipment increased 1.9 percent, reflecting a 118.7 percent jump in orders for defense aircraft and parts. Transportation equipment orders soared 13.3 percent in August.

Orders for civilian aircraft and parts tumbled 17.5 percent in September. Orders for motor vehicles rose 0.5 percent.

There were increases in orders for primary metals, machinery and computers and electronic products in September. Orders for electronic equipment, appliances and components fell.

The Commerce Department also said September orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, slipped 0.1 percent as reported last month. Orders for these so-called core capital goods fell 0.2 percent in August.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, dipped 0.1 percent in September instead of being unchanged as reported last month.

Core capital goods shipments fell 0.1 percent in August. Business spending on equipment stalled in the third quarter.

Reporting by Lucia Mutikani Editing by Paul Simao

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