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Economy in Brief

U.S. Factory Inventories Slip
by Tom Moeller October 4, 2005

Factory inventories slipped 0.1% in August following an upwardly revised 0.6% gain in July. To emphasize a notion that the turn toward inventory restocking has not yet begun, factory inventories less petroleum gave back most of the prior month's gain, fell 0.2% and have been virtually unchanged since March.

Electrical equipment inventories fell 0.1% (+2.5% y/y) for the fourth straight monthly decline. Computer inventories also slipped 0.2% (-0.5% y/y), primary metal inventories fell 0.5% (+17.6% y/y) for the third consecutive monthly drop and fabricated metals fell for the fourth consecutive month, off 0.4% (+7.1% y/y). Machinery inventories rose 0.4% (9.7% y/y) led by turbines and construction machinery.

Factory shipments surged 1.7% following a downwardly revised July gain. Less a 4.7% jump in shipments from petroleum refineries, factory shipments surged 1.4% (3.6% y/y). Electrical equipment shipments jumped 2.1% (6.0% y/y) and machinery rose 1.4% (8.4% y/y).

Factory sector orders reversed all of a a deepened 2.5% decline in July. The advance report of a surge in durables orders was little revised and they rose 3.3%.

Unfilled orders added 1.6% to the 1.0% jump in July. Nondefense aircraft & parts (32.5% y/y) again led the strength with a 3.9% surge. Less the transportation sector altogether, backlogs rose 1.8% (9.0% y/y) and the ratio of unfilled orders to shipments continued a moderate climb.

Factory Survey (NAICS) Aug July Y/Y 2004 2003 2002
Inventories -0.1% 0.6% 5.3% 7.7% -1.1% -5.4%
New Orders 2.5% -2.5% 7.5% 9.3% 3.5% -2.5%
Shipments 1.7% 0.1% 5.8% 9.5% 1.5% -2.5%
Unfilled Orders 1.6% 1.0% 10.1% 8.4% 8.0% -8.5%
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