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Economy in Brief

U.S. Factory Inventory Gain Moderate
by Tom Moeller December 5, 2007

Factory inventories ticked up 0.1% during October following a 0.6% surge in September. The three month in manufacturers' inventories remained stable at 2.3% (AR) but that was much more moderate than in prior years.

Excluding the volatile transportation sector, inventories were unchanged also after a 0.6% September increase. Three month accumulation at a 2.1% also is down from 7.1% for all of last year. The slowdown continued in inventories of computers & electronic products to a three month growth rate of 4.4% versus 10.4% last year and inventories of industrial machinery rose 1.9% following a 22.8% jump last year. Electrical equipment inventories have been falling since mid-year after 25.2% growth in 2006.

Factory shipments surged 1.0% in October but weakness during prior months left three month growth at -2.3% (AR). Much of that weakness has been due to the automotive and aircraft industries. Excluding transportation altogether, October shipments rose 1.1% and the three month growth rate was somewhat reduced at 3.7% versus 5.0% growth last year.

Total factory orders continue to hold little promise for a pickup in factory sector activity. A 0.5% October gain followed a like rise in September but three month growth fell to -10.2% (AR). The 0.4% October decline in durable goods orders in the advance report was little revised.

Unfilled orders rose 1.0%, about the same as in prior months. Excluding, the transportation industries unfilled orders rose 0.8% and the three month growth rate was double digit with a 10.4% rise.

Factory Survey (NAICS) October September Y/Y 2006 2005 2004
Inventories 0.1% 0.6% 2.2% 6.4% 8.9% 7.7%
New Orders 0.5% 0.3% 5.0% 5.1% 11.6% 6.9%
Shipments 1.0% 0.1% 4.7% 4.3% 10.3% 6.9%
Unfilled Orders 1.0% 1.1% 17.9% 20.0% 15.0% 3.9%
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