Good news for U.S. factories: Orders for motor vehicles and aircrafts have increased in July to its highest levels in four months, negating the drop in orders for business equipment.
In total, U.S factories orders increased by 2.5%, beating analyst expectations. This is according to Bloomberg, which writes, "Factory orders were projected to rise 2 percent, following a previously reported drop of 0.8 percent in June, according to the Bloomberg survey of 59 economists. Estimates ranged from gains of 0.6 percent to 3.5 percent."
"Demand for durable goods, which make up just over half of total factory demand, rose 4.1 percent," according to today's Institute for Supply Management report. Non-durable goods rose 1%.
But how good is this good news? The earthquake in Japan slowed down manufacturing, and July's stellar increase could simply be the industry "catching up" with the halted demand.
In fact, without the demand for planes and automobiles, factories orders overall fell "0.9 percent, less than estimated last week, after rising 0.8 percent the prior month."
Weak demand and an uncertain future means even fewer orders are expected. Meanwhile, big-ticket orders can only sustain the industry for so long.
According to Bloomberg, business activity in August expanded at a slower pace while the economy's "business barometer" is reportedly on the fence (53 of 100) of expansion and contraction, and expected to dip even closer toward the danger zone (below 50).
Interested in keeping tabs on the future of factories? To help you follow the industry, we list below this year's most profitable large cap (over $10B) industrial goods stocks. (Click here to access free, interactive tools to analyze these ideas.)
1. Precision Castparts
5. Deere & Company
7. Parker Hannifin
8. Honeywell International
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
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