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Economy in Brief

U.S. Factory Orders & Shipments Rise Again in January
by Tom Moeller  March 4, 2021

• Gain in factory orders driven by durable goods.

• Shipments continue to strengthen.

• Order backlogs & inventories edge higher.

Manufacturing activity is strengthening. Factory orders rose 2.6% (2.8% y/y) in January after improving 1.6% in December, revised from 1.1%. A 1.1% January increase had been expected in the Action Economics Forecast Survey.

Durable goods orders rose 3.4% (6.3% y/y), which was unrevised from last week's report. Transportation sector orders strengthened 7.7% (2.0% y/y) as nondefense aircraft orders surged. Electrical equipment & appliance orders gained 4.0% (8.8% y/y) but machinery orders eased 0.6% (+5.9% y/y). The full report on January durable goods activity is available here.

Nondurable goods orders, which equal shipments, surged 1.9% (-0.6% y/y) after rising 2.0% during December and 1.2% in November. Shipments from petroleum refineries surged 7.6% (-14.5% y/y) in both January and December as oil prices continued to rise. Among other nondurable goods sectors, basic chemical shipments rose 0.9% (5.2% y/y) while paper product shipments strengthened 1.9% (5.3% y/y). Textile mill shipments improved 2.3% (1.7% y/y) but apparel shipments declined 3.4% (-0.9% y/y).

Shipments of durable goods improved 1.9% in January (6.2% y/y) following a 2.1% December improvement. Transportation product shipments rose 0.8% (4.2% y/y) as nondefense aircraft shipments jumped 20.1% (-8.6% y/y) after strengthening 42.7%. Shipments of computers & electronic products improved 1.0% (9.1% y/y).

Inventories of manufactured products edged 0.1% higher in January (-0.4% y/y). Durable goods inventories fell 0.3% (+0.3% y/y) while nondurable goods inventories strengthened 0.7% (-1.5% y/y). The value of petroleum refinery inventories surged for the third straight month, up 7.0% (-12.9% y/y) while textile mill inventories eased 0.6% (-4.5% y/y). Food product inventories rose 0.3% (0.6% y/y) and basic chemical inventories edged 0.1% higher (2.4% y/y).

The value of unfilled orders improved 0.1% in January (-6.3% y/y) but had been falling since mid-2018. Unfilled orders in the transportation sector eased 0.1% (-11.1% y/y). Electrical equipment & appliances backlogs rose 1.2% (10.2% y/y) but commercial aircraft backlogs eased 0.5% (-16.3% y/y).

The factory sector figures and West Texas intermediate oil prices are available in Haver's USECON database.

The Fed's latest Beige Book covering regional economic conditions is available here.

Factory Sector (% chg) - NAICS Classification Jan Dec Nov Jan Y/Y 2020 2019 2018
New Orders 2.6 1.6 1.3 2.8 -6.7 -0.1 6.8
Shipments 1.9 2.1 0.8 2.7 -5.7 1.0 6.6
Unfilled Orders 0.1 -0.2 -0.0 -6.3 -6.4 -1.8 3.9
Inventories 0.1 0.3 0.8 -0.4 -0.6 2.8 3.6
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