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Economy in Brief

U.S. Factory Inventories Flew Off The Shelves
by Tom Moeller March 31, 2006

Factory inventories dropped 0.4% last month. This first decline since August of last year followed 1.1% accumulation during January, that was twice the 0.5% gain initially estimated.

Motor vehicle & parts inventories dropped 0.4% (-3.3% y/y), the third consecutive monthly decline. Nondefense aircraft inventories also were off 1.5% (+2.2% y/y). Less transportation altogether factory inventories fell 0.2% (+3.4% y/y) after a 1.2% jump during January.

Primary metals inventories jumped 1.2% (2.9% y/y) but machinery inventories fell 0.1% (+5.2% y/y and electrical equipment fell 0.2% (+6.7% y/y). These latter two declines followed huge increases during January.

Total factory orders gained back 0.2% of January's 3.9% skid. Durable goods orders gained 2.7%, little revised from the advance report. Factory orders less the transportation sector altogether fell 2.0% (+6.2% y/y) and that wholly reversed the gain during January.

Factory shipments fell 1.1% and less transportation shipments fell an even greater 1.3% (7.2% y/y). The total was dragged down by an 11.8% (+19.7% y/y) drop in shipments of petroleum. Factory shipments less transportation and petroleum slipped 0.1% (+6.2% y/y) after a 1.1% surge during January.

Unfilled orders rose 0.9% but the 0.2% January decline was shallower than originally estimated. Less the transportation sector, backlogs rose 0.4% (10.0% y/y) and the 0.6% January increase was upwardly revised.

Factory Survey (NAICS) Feb Jan Y/Y 2005 2004 2003
Inventories -0.4% 1.1% 3.2% 4.4% 7.7% -1.1%
New Orders 0.2% -3.9% 7.2% 8.5% 9.3% 3.5%
Shipments -1.1% 0.1% 7.1% 7.4% 9.5% 1.5%
Unfilled Orders 0.9% -0.2% 17.0% 16.5% 8.4% 8.0%
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