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Economy in Brief

U.S. Factory Shipments Surge And Trim Inventories Slightly
by Tom Moeller February 4, 2010

actory shipments surged for the fourth straight month during December. The 1.9% increase followed an upwardly revised 1.6% November gain  and it was the fourth straight month of strong increase. Shipments of nondurables were strong all during 2009 (9.3% y/y) due to the rise in oil prices. Excluding oil, factory shipments rose 0.9% y/y, still an improvement from the 11.9% y/y decline as of July. Shipments of electrical equipment (-8.4% y/y) were strong for the third consecutive month. Machinery shipments jumped 5.1% (-16.1% y/y) and have risen sharply in three of the last four periods. Primary metals shipments (+2.2% y/y) increased notably during 2H '09 and furniture shipments (-10.0% y/y) have risen for three months. 

Though factory inventories slipped 0.1% in December that followed much larger declines extending back to September of 2008. The latest monthly drop came despite a 3.9% jump (-22.1% y/y) in auto inventories which was the third consecutive strong monthly gain. Elsewhere, petroleum inventories jumped 4.2% (25.8% y/y) due to higher prices. Excluding oil, factory inventories slipped 0.3% (-10.2% y/y). Machinery inventories slipped (-13.4% y/y) but that compares to large declines which extend through most of last year. Electrical equipment inventories slipped 0.5% (-17.7% y/y) but the monthly rates of decline also  have slowed considerably. Inventories of computers & electronic products rose 0.7% (-9.5% y/y) for the first monthly gain in twelve months. 

Factory orders rose 1.0% for the second consecutive month but that rise also was lifted by higher oil prices. Less oil (where orders equal shipments), orders rose 0.7% (-1.0% y/y) and have risen for four consecutive months. Orders for primary metals have been notably strong (16.9% y/y) as have machinery orders where the 0.1% y/y decline compares to one-third drops early in 2008.The decline in electrical equipment orders has moderated to 7.4% from -30.3% as of June. 

 The Manufacturers' Shipments, Inventories and Orders (MSIO) data are available in Haver's USECON database. 

Factory Survey (NAICS, %) December November October Y/Y 2009 2008 2007
Inventories -0.1 0.2 0.4 -8.6 -8.6 2.2 3.7
   Excluding Transportation -0.0 0.3 0.3 -9.2 -9.2 -0.5 2.7
New Orders 1.0 1.0 0.8 3.6 -17.2 0.0 1.9
   Excluding Transportation 1.2 2.1 0.7 5.8 -15.8 3.0 1.2
Shipments 1.9 1.6 0.9 2.6 -15.2 1.6 1.2
   Excluding Transportation 1.6 1.7 1.6 3.1 -15.3 3.5 1.5
Unfilled Orders -1.0 -0.7 -0.6 -10.3 -10.3 3.4 17.1
  Excluding Transportation 0.2 0.2 -0.1 -8.6 -8.6 -1.4 8.2
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