Factory Orders Slide in September, Unfilled Orders Rise

New orders for U.S. factory goods fell for second straight month in September, a temporary setback for the manufacturing sector.

The Commerce Department said on Tuesday orders dropped 0.6 percent. August's orders were slightly revised to show a 10.0 percent fall instead of the previously reported 10.1 percent decline.

September's fall was in line with Wall Street's expectations. The almost broad-based decline in orders, which was led by aircraft, machinery, capital goods and computers and electronic products, is likely to be short-lived.

A survey of national factories published on Monday showed a strong rebound in new order growth and backlogs in October. The increase was largely driven by domestic demand.

In September, orders excluding the volatile transportation category were flat for the second month.

There were signs of underlying strength in September's factory report. Unfilled orders at factories rose 0.3 percent after increasing 0.6 percent in August.

Order backlogs have increased in 17 of the last 18 months. Shipments rebounded slightly after falling in August, while inventories rose marginally. The inventories-to-shipments ratio was at 1.30, unchanged from August.

The department also said orders for durable goods, manufactured products expected to last three years or more, declined by a smaller 1.1 percent instead of the 1.3 percent reported last month.

Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - fell 1.6 percent rather than the previously reported 1.7 percent decline. (Reporting By Lucia Mutikani; Editing by Andrea Ricci)