US Factory Orders Fall in May, Adding to Signs of Softer Demand

New orders for US manufactured goods fell about 1.3% in May, according to the latest factory orders data, a decline that was smaller than many analysts had feared but that nonetheless pointed to softer underlying demand. The drop was led by a pullback in transportation equipment, particularly volatile aircraft orders, which tend to swing sharply from month to month. Excluding that category, the picture was more stable, suggesting the broader manufacturing base is holding up rather than deteriorating rapidly. The report adds to a run of mixed signals on the US economy, arriving alongside a weaker-than-expected June employment report that showed hiring cooling. Manufacturers have been contending with elevated input costs, the effects of tariffs on some imported components, and uncertainty tied to geopolitics and energy prices. Economists watch factory orders as a gauge of business investment intentions and future production, since orders today translate into output and shipments in the months ahead. Taken together with softer jobs data, the figures reinforce expectations that the Federal Reserve has room to be patient on policy.