US factory orders rose slightly by 0.1% month-on-month in August, with AI infrastructure supporting manufacturing, while a decline in aircraft orders partially offset the increase.

U.S. factory orders for goods rose only slightly in August, with strong demand for electrical equipment, home appliances and components, but a decline in commercial aircraft orders offset some of the gains.

The U.S. Census Bureau reported on Friday that factory orders rose 0.1% month-over-month in August, in line with market expectations, and increased 6.8% year-over-year. The July month-over-month increase was revised down to 0.8%, from a previously reported 0.9%.

Factory orders in August were dragged down by a 4.3% drop in orders for civil aircraft and parts.

Orders for motor vehicle bodies, parts, and trailers increased by 0.8%. Machinery orders surged by 1.1%. Orders for computers and electronic products remained flat month-over-month but increased by 14.7% year-over-year. Orders for electrical equipment, household appliances, and parts rose sharply by 1.1%.

The U.S. Census Bureau also reported that orders for non-defense capital goods excluding aircraft rose 1.6% month-over-month in August, consistent with the data released the previous month, while shipments rose 0.5% month-over-month in August, lower than the previously expected 0.6%.

This indicator is often regarded as an important measure of a company’s equipment investment plan, namely core capital goods orders.

AI infrastructure and inventory replenishment support the manufacturing sector, while energy prices and tariffs pose potential risks.

AI infrastructure is supporting the manufacturing industry, while companies replenishing their inventories to meet strong domestic demand is also supporting the manufacturing sector.

However, as the US-Israel war against Iran disrupts supply chains and drives up energy prices, the market is concerned that the manufacturing sector, which is not related to the surge in artificial intelligence spending, may face greater pressure in the coming months.

Diesel prices have risen to record highs, and economists say the U.S. economy may soon feel the effects. Continued import tariffs also pose a downside risk.

A survey by the Institute for Supply Management (ISM) released Thursday shows that U.S. manufacturers are increasingly concerned about the impact of the ongoing trade war with Canada.

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