Factory Orders Show Further Evidence of Strength in Manufacturing

- Factory Orders for August rose 2.5% versus estimates of a 2.0% increase and a 2.5% decline in July.

BOTTOM LINE: Orders placed with US factories rose 2.5% in August, the third increase in four months, signaling manufacturing was gaining strength ahead of Hurricanes Katrina and Rita, Bloomberg reported. Bookings for commercial aircraft surged 9.2% following a 21% decrease in July. Orders for capital goods excluding aircraft, a barometer for future business investment, gained 3.1% after a 3.9% decline in July. The inventory-to-shipments ratio fell to 1.18 months, the lowest level since December, versus 1.2 months the prior month. Unfilled orders rose 1.6% and have now risen 10% over the last 12 months. I continue to believe manufacturing will accelerate through year-end, adding to US growth, as hurricane rebuilding takes hold.