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Economy in Brief

U.S. Factory Numbers Dominated by Aircraft Industry
by Tom Moeller February 5, 2008

Factory inventories rose 0.8% during December. That gain followed a 0.7% increase during November and pulled the three month increase in inventories to 1.6%, up from a low of 0.2% in August. Nevertheless the 3.6% rise in inventories last year was well below the 6.4% increase during 2006.

Excluding the volatile transportation sector, inventories rose 0.4% in December and the three month average rate of accumulation of 0.4% is up from 0.1% decumulation in August. The civilian aircraft industry very much dominated the factory sector figures last year with a 7.1% gain in inventories over the year's final three months and a 23.2% gain y/y.

A 2.3% rise in total factory orders during December also was dominated by an 11.7% (28.4% y/y) surge in orders for civilian aircraft. It followed a 28.6% November jump. Overall, a 5.0% rise in orders for durable goods was reduced only slightly from the advance report of a 5.2% increase.

The aircraft industry just couldn't keep shipments up with the inflow of new orders. Unfilled orders of civilian aircraft & parts surged 4.2% in December (42.7% y/y) and the average change during the final three months of 2007 was 10.1%. Excluding the transportation sector altogether unfilled orders rose 1.3% in December and the three month average growth rate was a still firm 2.5%. That rate of increase has been fairly steady of late.

Factory shipments fell 0.3% in December after gains of 1.3% and 1.2% during the prior two months. Excluding transportation shipments fell 0.1% after gains of 1.6% and 1.4%.

Publishing FOMC Economic Forecasts from the Federal Reserve Bank of San Francisco can be found here.

Factory Survey (NAICS, %) December November Y/Y 2007 2006 2005
Inventories 0.8 0.7 3.6 3.6 6.4 8.9
New Orders 2.3 1.7 6.1 1.4 5.1 11.6
   Excluding Transportation 0.7 1.5 5.9 1.2 5.4 11.5
Shipments -0.3 1.3 4.1 1.1 4.3 10.3
Unfilled Orders 2.5 1.2 18.2 18.2 20.0 15.0
   Excluding Transportation 1.3 0.5 9.1 9.1 14.1 8.4
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