US new orders for manufactured goods declined in July due to weak commercial aircraft orders, though business spending on equipment appears to maintain strong momentum at the beginning of the third quarter.

The US Census Bureau reported Wednesday that factory orders fell 1.3% in July, following an unrevised 4.8% drop in June factory orders. Economists surveyed by Reuters had previously forecast a 1.4% decline in July factory orders. Year-over-year, July orders grew 3.5%.

Import tariffs have created headwinds for manufacturing — the Institute for Supply Management (ISM) manufacturing Purchasing Managers' Index (PMI) contracted for the sixth consecutive month in August. A US appeals court ruled last Friday that most tariffs implemented by President Donald Trump were illegal, creating additional uncertainty for businesses.

Commercial aircraft orders dropped 32.7% in July. Motor vehicles, parts and trailers orders rebounded 1.9%; computers and electronic products orders increased 0.5%; electrical equipment, appliances and components orders surged 1.9%; machinery orders grew 1.9%.

The US government also reported that "non-defense capital goods orders excluding aircraft," considered a gauge of business equipment spending plans, increased 1.1% in July as estimated last month.

Similarly, as reported last month, shipments of these so-called "core capital goods" grew 0.7%. Business equipment spending grew steadily in the second quarter, contributing to the US economy's 3.3% annualized growth rate for that quarter.