· Excluding the volatile transportation sector, inventories were unchanged also after a 0.6% September increase. Three month accumulation at a 2.1% also is down from 7.1% for all of last year. The slowdown continued in inventories of computers & electronic products to a three month growth rate of 4.4% versus 10.4% last year and inventories of industrial machinery rose 1.9% following a 22.8% jump last year. Electrical equipment inventories have been falling since mid-year after 25.2% growth in 2006.

· Factory shipments surged 1.0% in October but weakness during prior months left three month growth at -2.3% (AR). Much of that weakness has been due to the automotive and aircraft industries. Excluding transportation altogether, October shipments rose 1.1% and the three month growth rate was somewhat reduced at 3.7% versus 5.0% growth last year. 

· Total factory orders continue to hold little promise for a pickup in factory sector activity. A 0.5% October gain followed a like rise in September but three month growth fell to -10.2% (AR). The 0.4% October decline in durable goods orders in the advance report was little revised.

· Unfilled orders rose 1.0%, about the same as in prior months. Excluding, the transportation industries unfilled orders rose 0.8% and the three month growth rate was double digit with a 10.4% rise.

Factory Survey (NAICS)

October

September

Y/Y

2006

2005

2004

Inventories

0.1%

0.6%

2.2%

6.4%

8.9%

7.7%

New Orders

0.5%

0.3%

5.0%

5.1%

11.6%

6.9%

Shipments

1.0%

0.1%

4.7%

4.3%

10.3%

6.9%

Unfilled Orders

1.0%

1.1%

17.9%

20.0%

15.0%

3.9%