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Economy in Brief

U.S. Factory Sector Inventory Gain Dropped Sharply
by Tom Moeller January 8, 2007

Factory inventories increased just 0.2% in November after a downwardly revised 0.3% October increase. These gains were down from the 0.7% average during the prior six months.

Petroleum refineries' inventories did rise 0.7% but that uptick followed sharp 6.3% and 4.3% declines during the prior two months due to lower oil prices. The new development in November was that less petroleum, factory inventories grew just 0.2% (7.0% y/y), down sharply from the 0.7% average of the prior six months.

Machinery inventories fell 0.5% (+6.2% y/y) and primary metal inventories eased 0.3% (+18.9% y/y). Inventories of computers & electronic products rose 0.8% (7.2% y/y) while inventories of electrical equipment rose 0.6% (11.0% y/y) and the 3-month change fell to only 1.2% (AR). Furniture inventories rose 1.0% and in a hint that the accumulation was involuntary the 3-month change rose to 10.3%, the highest in a year.

Total factory orders recovered 0.9% after the hard October plunge. Durable goods orders jumped 1.6% which was revised down slightly from the advance report. Factory orders less transportation fell 0.5% (+0.6% y/y), the third consecutive monthly decline. Much of the recently slower growth in this measure reflects petroleum where orders (which equal shipments), but non-transportation orders less oil fell 0.9% (+1.4% y/y) in November for the fourth consecutive monthly decline.

Factory shipments rose 0.1% for the second month but factory shipments less transportation & petroleum slipped 0.2% (+1.4% y/y).

Factory Survey (NAICS) November October Y/Y 2005 2004 2003
Inventories 0.2% 0.3% 7.1% 4.0% 6.9% -7.4%
New Orders 0.9% -4.5% -0.8% 8.5% 7.5% 0.9%
Shipments 0.1% 0.1% 0.7% 7.1% 6.8% 0.2%
Unfilled Orders 1.7% 1.4% 20.4% 16.3% 4.5% -1.0%
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