Factory inventories rose 0.5% in July, the most for any one month since February. The rise, however, was very much a function of the 5.9% (19.2% y/y) jump in inventories at petroleum refineries. Nevertheless, less petroleum factory inventories rose 0.2%, the first monthly rise since March. Benchmark revisions made on August 19th extended back to 1992 and generally lowered the level of factory inventories.

A 1.5% (10.2% y/y) rise in machinery inventories led last month's accumulation and it was the strongest monthly gain since January. That was accompanied by a 0.8% (-1.1% y/y) rise in computer inventories and a 0.4% (4.7% y/y) gain in the electrical equipment industry.

Factory shipments surged 0.7%, but again the strength of the gain reflected higher oil prices. Less a 6.4% jump in shipments from petroleum refineries, factory shipments rose just 0.3% (4.8% y/y) following a 0.3% decline in June. Strength concentrated in the electrical equipment industry where shipments rose 1.0% (5.0% y/y) and in the computer industry where shipments rose 0.4% (8.3% y/y). Machinery shipments fell 0.1% (+4.9% y/y).

Factory sector orders fell 1.9% reflecting an unrevised advance report of a 4.9% decline in durables orders which were down due to lower aircraft orders.

Unfilled orders surged another 1.0% and again reflected higher backlogs of nondefense aircraft & parts (28.4% y/y), but industry gains elsewhere were broad based. The ratio of unfilled orders to shipments outside of transportation dipped slightly but remained elevated versus the lows of earlier this year.