US factory orders fall in October

WASHINGTON, Jan 7 (Reuters) - New orders for U.S. factory goods fell in October, but business spending on equipment was solid early in the fourth quarter.

Factory orders dropped 1.3%, weighed down by sharp declines in the volatile aircraft category, after an unrevised 0.2% gain in September, the Commerce Department's Census Bureau said on Wednesday. Economists polled by Reuters had forecast factory orders falling 1.2%.

Orders increased 3.3% on a year-on-year basis in October. The report was delayed by the record 43-day shutdown of the federal government. Manufacturing, which accounts for about 10.1% of the economy, has been constrained by President Donald Trump's sweeping tariffs.

A survey from the Institute for Supply Management on Monday showed its manufacturing PMI slumped to a 14-month low in December, with comments from respondents continuing to single out tariffs as a problem.

But a surge in spending on artificial intelligence is supporting some segments of the industry. The Census Bureau also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.5% in October as estimated last month.

Shipments of these so-called core capital goods rose 0.8%, instead of 0.7% as reported last month.