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Economy in Brief

U.S. Factory Inventory Growth Slowed
by Tom Moeller June 2, 2005

Factory inventories rose just 0.1% in April following an upwardly revised 0.7% gain in March. These gains lowered the three month growth in inventories to 5.8%, nearly half the high rate of accumulation set last summer.

These figures have been bloated by the surge in oil prices. Less petroleum, factory inventories rose 0.1% (8.1% y/y) in April and the three month rate of accumulation slowed to 5.1% versus 10.9% in August.

A slower rate of inventory accumulation has been notable in the furniture industry where three month growth fell to 2.8% from a high of 28.4%. Accumulation of electrical equipment about halved to 9.6% and the level of computer inventories has declined versus a double digit rate of accumulation last summer. The slowdown in other industries has been widespread.

Factory shipments rose a firm 0.7% but here again the trend has weakened. Three month growth fell to 3.1% from a high of 20.4%. Less petroleum recent growth in shipments has been negative versus 17% growth a year ago.

Orders to the factory sector rose 0.9%, juiced by a 1.9% rise in durable goods orders which was unrevised from the advance report.

Unfilled orders were unchanged and the ratio of unfilled orders to shipments fell to a new low.

Do Technological Improvements in the Manufacturing Sector Raise or Lower Employment? from the Federal Reserve Bank of Philadelphia can be found here.

Factory Survey (NAICS) April March Y/Y 2004 2003 2002
Inventories 0.1% 0.7% 8.6% 7.5% -1.3% -1.8%
New Orders 0.9% 0.7% 6.8% 10.9% 3.7% -1.9%
Shipments 0.7% 1.6% 7.8% 10.5% 2.6% -2.0%
Unfilled Orders 0.0% -0.2% 6.3% 9.1% 4.2% -6.1%
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