US factory orders rose by 0.1% month-on-month in August; AI infrastructure supports manufacturing, but decline in aircraft orders offset part of the increase

New orders for US factory goods showed only modest growth in August, with strong demand for electrical equipment, household appliances, and components, but a decline in commercial aircraft orders offset part of the increase.

The US Department of Commerce Census Bureau announced on Friday that factory orders in August rose 0.1% month-on-month, matching market expectations, and increased 6.8% year-on-year. The month-on-month growth for July was revised down to 0.8% from the previously reported 0.9%.

August factory orders were weighed down by a 4.3% drop in orders for civilian aircraft and components.

Orders for motor vehicle bodies, parts, and trailers grew by 0.8%. Machinery orders saw a significant increase of 1.1%. Orders for computers and electronic products were flat month-on-month but rose 14.7% year-on-year. Orders for electrical equipment, household appliances, and components surged by 1.1%.

The US Department of Commerce Census Bureau also reported that in August, non-defense capital goods orders excluding aircraft rose 1.6% month-on-month, in line with last month's figures, while shipments increased by 0.5% month-on-month, slightly below the previously expected 0.6%.

This indicator is typically regarded as a key measure of business equipment investment plans—namely, core capital goods orders.

AI Infrastructure and Inventory Restocking Support Manufacturing, Energy Prices and Tariffs Pose Potential Risks

AI infrastructure is supporting manufacturing, and companies replenishing inventories to meet robust domestic demand have also provided a boost to the manufacturing sector.

However, as the Israel-Iran war disrupts supply chains and pushes up energy prices, there are concerns that manufacturing sectors unrelated to the AI spending boom may face greater pressure in the coming months.

Diesel prices have climbed to record highs, and economists say the US economy may soon feel the impact. Persisting import tariffs also pose downside risks.

A survey released Thursday by the US Institute for Supply Management (ISM) showed US manufacturers' concerns about the ongoing trade dispute with Canada are growing as the conflict continues.