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Economy in Brief

U.S. Factory Inventory Gain Slowed With Negative Shipment Growth
by Tom Moeller July 3, 2007

Factory inventories rose 0.4% during May after the moderate 0.4% gain in April. The gains left the y/y growth at 4.3%. Slower than the 6.4% rate of accumulation during all of 2006.

Much of the slowdown has occurred in inventories of computers & electronic products slowed to 4.3% y/y from a 10.4% rise in 2006. The y/y gain in electrical equipment inventories at 13.3% also is half the 25.2% rise last year.

Slower inventory growth follows the weakness in factory shipments which are down 0.4% y/y. Less the transportation sector shipments also are down 0.1% y/y.

Total factory orders do not paint a hold much promise for a robust recovery in shipments as they reversed in May all of a 0.5% gain during April.

Unfilled orders nevertheless remained strong posting y/y growth of 20.1%, about the same as last year’s strong rise.

Factory Survey (NAICS) May April Y/Y 2006 2005 2004
Inventories 0.3% 0.4% 4.3% 6.4% 8.9% 7.7%
New Orders -0.5% 0.5% -0.1% 5.1% 11.6% 6.9%
Shipments 1.0% 1.0% -0.4% 4.3% 10.3% 6.9%
Unfilled Orders 0.9% 1.9% 20.1% 20.0% 15.0% 3.9%
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