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

The US Census Bureau reported on Friday that factory orders rose 0.1% month-over-month in August, in line with market expectations, and up 6.8% year-over-year. The July month-over-month gain was revised down to 0.8% from the previously reported 0.9%.

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

Orders for motor vehicle bodies, parts, and trailers rose 0.8%. Machinery orders climbed 1.1%. Computer and electronic product orders were flat month-over-month but up 14.7% year-over-year. Orders for electrical equipment, household appliances, and components jumped 1.1%.

The Census Bureau also reported that nondefense capital goods orders excluding aircraft rose 1.6% month-over-month in August, matching the previously reported figure, while shipments increased 0.5% in August, below the previously estimated 0.6%.

This metric is often seen as a key gauge of business equipment investment plans, known as core capital goods orders.

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

AI infrastructure is supporting manufacturing, while businesses restocking inventory to meet strong domestic demand is also providing support to the sector.

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

Diesel prices have risen to historic highs, and economists say the US economy may soon feel the impact. Ongoing import tariffs also pose a downside risk.

A US Institute for Supply Management (ISM) survey released on Thursday showed that US manufacturers' concerns about the impact of the ongoing trade war with Canada are rising.