Retailers report modest sales gains for Aug.; factory orders decline

NEW YORK (AP) -- Many retailers are reporting modest gains for August as shoppers spent cautiously on clothing - and a separate report shows that in July U.S. factory orders declined.

The retail results cap a disappointing back-to-school selling season that raises questions about whether Americans will spend during the winter holidays, the biggest shopping period of the year.

Revenue at stores opened at least a year - an industry measure of a retailer's health- rose 3.7 percent in August, a small uptick from the 3.5 percent gain from July, according to a preliminary tally of 8 retailers by the International Council of Shopping Centers. The figure excludes drug store chains.

Clothing chain Cato Corp. was among the retailers that posted a decline, while L Brands Inc. posted a sales increase that was a bit below Wall Street expectations.

FACTORY ORDERS DROP

Orders to U.S. factories fell in July by the sharpest amount in four months, held back by weaker demand for commercial aircraft and heavy machinery. A key category that reflects business investment plans also fell.

The Commerce Department says factory orders dropped 2.4 percent in July compared with June, when orders rose 1.6 percent.

Orders for core capital goods, a category viewed as a proxy for business investment spending, fell 4 percent, the biggest setback since February.

Core capital goods are considered a good measure of businesses' confidence in the economy. They include items that point to expansion - such as machinery, computers and heavy trucks - while excluding volatile orders for aircraft and defense. The July setback was expected to be temporary.