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Economy in Brief

U.S. Factory Inventories Accumulate
by Tom Moeller May 3, 2006

Factory inventories rose 0.7% during March and more than made up for an unrevised 0.4% drop the prior month.

Much of the prior month's inventory decline had been due to lower computers & electronic products which fully recovered with a 2.9% (4.1% y/y) rise. Machinery inventories also were down in February and then rose in March by 1.0% (6.0% y/y) while a 0.2% decline in electrical equipment inventories (6.1% y/y) also fully reversed.

Continuing with earlier accumulation, inventories of furniture & related products jumped 1.9% (5.5% y/y) while primary metals inventories added 0.2% (0.5% y/y) to the very strong accumulation of January & February.

Total factory orders jumped 4.2% due to a 6.5% surge in durable goods orders, revised up from the advance report of a 6.1% surge. That was goosed by orders for nondefense aircraft & parts which rose 71.3% (329.9% y/y). Factory orders less the transportation sector altogether rose 2.2% (6.8% y/y) and reversed all of the prior month's decline.

Factory shipments rose 0.8% and reversed most of a February drop while less transportation shipments gained back half of the February drop with a 0.8% increase (6.0% y/y). Petroleum shipments rose 7.8% (7.3% y/y). Factory shipments less transportation & petroleum ticked up 0.1% (5.9% y/y).

Unfilled orders ballooned 2.9% due to the strength of aircraft orders. Nevertheless, less the transportation sector altogether backlogs rose 1.5% (11.1% y/y).

Factory Survey (NAICS) Mar Feb Y/Y 2005 2004 2003
Inventories 0.7% -0.4% 3.4% 4.4% 7.7% -1.1%
New Orders 4.2% 0.4% 11.6% 8.5% 9.3% 3.5%
Shipments 0.8% -1.2% 6.1% 7.4% 9.5% 1.5%
Unfilled Orders 2.9% 1.1% 21.1% 16.5% 8.4% 8.0%
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