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Economy in Brief

U.S. Factory Inventory Growth Recovered
by Tom Moeller August 2, 2007

Factory inventories rose 0.3% during June following a 0.4% gain during May. While moderate, the increases are up from the 0.1% three month average growth ended February.

Growth in primary metals inventories picked up during the past three months as did growth in light truck inventories. Growth in inventories of nondefense aircraft & parts also has soared. In most other durable goods categories, however, growth in inventories has slowed recently. Many industries have seen outright decumulation such as in furniture and computers & electronic products.

A slowdown in growth of factory shipments caused the recent inventory back-up. Shipments have fallen in three of this year’s months. For June the three month growth rate fell to 1.2%, helped by a 0.6% decline in June. The same pattern of recovery then a fall in growth is evident in shipments less the transportation sector.

Total factory orders rose 0.6% in June and that reversed the prior month’s 0.5% decline. Durable goods orders jumped 1.3%. The rise, however, only recovered some of the prior month’s 2.4% decline. Factory orders less transportation fell 0.5% (-1.3% y/y) while orders (shipments really) to petroleum refineries were unchanged (-5.5% y/y.

Unfilled orders continued their rise with a 1.4% gain during June. Less the transportation sector, where backlogs of civilian aircraft are up 43.3% y/y, backlogs rose 0.1% (9.6% y/y).

Factory Survey (NAICS) June May Y/Y 2006 2005 2004
Inventories 0.3% 0.4% 3.7% 6.4% 8.9% 7.7%
New Orders 0.6% -0.5% -0.7% 5.1% 11.6% 6.9%
Shipments -0.6% 0.8% -0.9% 4.3% 10.3% 6.9%
Unfilled Orders 1.4% 0.9% 19.6% 20.0% 15.0% 3.9%
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