US core factory orders unexpectedly plunge most in a year, raising questions about Fed’s next move

US factory orders dropped 0.3% month-over-month in June to $656.5 billion, marking the second straight monthly decline and catching forecasters off guard. The core measure, which strips out the volatile transportation sector, posted its steepest fall in a year. The numbers tell a clear story The US Census Bureau released its full Manufacturers’ Shipments, Inventories, and Orders report on August 4, and the headline wasn’t pretty. June’s 0.3% decline followed an even uglier 1.1% drop in May, creating a two-month losing streak that contrasts sharply with April’s 4.8% surge. Durable goods new orders actually rose 0.3% in June to $334.8 billion, driven primarily by gains in computers and electronics. Core capital goods orders, a closely watched proxy for business investment, climbed 0.9%. Why this matters for the Fed and risk assets Manufacturing data doesn’t exist in a vacuum. Factory orders feed into GDP calculations, employment forecasts, and most importantly, the Federal Reserve’s assessment of whether the economy is running too hot, too cold, or somewhere in between. A sustained decline in manufacturing orders would typically push the Fed toward a more accommodative stance. A weak...