US Core Factory Orders Unexpectedly Plunge Most In A Year

Despite the latest Manufacturing PMI surging to four year highs, US Factory Orders unexpectedly dropped in June (-0.3% MoM vs +0.2% MoM expected). This is the second monthly decline in the headline print in a row, but orders remain up 7.4% YoY...Source: BloombergWorse still, Core Factory Orders (excluding Transports), dropped 0.4% MoM (dramatically missing expectations of a 0.4% MoM rise). This is the first monthly drop since October and biggest MoM decline since April 2025...Source: BloombergOrders Ex-Defense also tumbled 0.4% MoM, down for the second month in a row.So while the soft survey data is positive, the hard data is deteriorating.The reason for that is a familiar one in this bifurcated economy, as we showed from ISM's respondents...Green ones from AI, semiconductor, electronics and machinery firms report strong demand from AI data centers, chips and defense.Red ones from metals, transportation, chemicals and consumer-related sectors report weak demand, tariffs, higher costs, geopolitical risks and pricing chaos.Simply put, the AI supply chain is booming, Defense is enthused; the rest is not.