US factory orders rose 2.8 per cent in July but the business investment sector fell sharply

WASHINGTON – Orders to U.S. companies rose in July, reflecting a surge in demand for autos and commercial aircraft. But in a troubling sign of manufacturing weakness, a key orders category that tracks business investment plans fell by the largest amount in eight months.

The Commerce Department says factory orders rose 2.8 per cent in July, the biggest overall advance in a year, reflecting sizable gains in demand for motor vehicles and airplanes. But core capital goods orders, viewed as a good proxy for investment spending, plunged 4 per cent, the fourth setback in the past five months.

The worry is that businesses have begun to scale back their plans to expand and modernize in the face of spreading economic weakness in Europe and such major U.S. export markets as China, Brazil and India.