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Economy in Brief

U.S. Factory Inventories Down Again
by Tom Moeller August 2, 2005

Factory inventories fell in June, down modestly for the third consecutive month. Three month growth in inventories fell to -0.9% (AR) versus the peak rate of accumulation near 12% in March and 7.5% growth last year. The slowdown accounts for much of this year's slowdown in factory output growth.

Slower rates of inventory accumulation continue notable in the primary metals industry where three month growth fell to 0.5% versus the high of 42.2% and in the electrical equipment industry where growth in inventories fell to 1.8% versus an 18.5% peak. The level of computer inventories has been declining this year versus a peak growth rate of 13% last summer.

Factory shipments fell slightly in June and three month growth fell to 3.7% versus the high above 20% early last year.

Orders to the factory sector jumped 1.0% and the rise in durable goods orders was revised up to 2.0% from the advance report of a 1.4% gain.

Unfilled orders surged another 2.8% as backlogs of aircraft & parts jumped 5.8% (30.2% y/y). Less transportation altogether backlogs rose 1.9% (9.5% y/y) boosted by a 2.5% (14.8% y/y) gain in machinery. The ratio of unfilled orders to shipments outside of transportation jumped the highest level since 2002.

Factory Survey (NAICS) June May Y/Y 2004 2003 2002
Inventories -0.0% -0.2% 6.4% 7.5% -1.3% -1.8%
New Orders 1.0% 3.6% 9.8% 10.9% 3.7% -1.9%
Shipments -0.1% 0.3% 6.2% 10.5% 2.6% -2.0%
Unfilled Orders 2.8% 2.1% 10.1% 9.1% 4.2% -6.1%
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