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Economy in Brief

U.S. Factory Orders Fall And Inventory Gain Slows
by Tom Moeller  August 4, 2011

Reported yesterday, manufacturing orders fell 0.8% during June after a little-revised 0.6% May increase. Consensus expectations were for a 0.7% decline. For durable goods only, orders fell 1.9% which was revised up slightly from the 2.1% decline in the advance report. Nondurable goods orders, which equal shipments, were unchanged (+16.2% y/y). Apparel shipments jumped 2.3% (4.7% y/y) but that was offset by a 2.2% decline (+43.2% y/y) in shipments from oil refineries. Shipments of paper products rose 0.2% (1.0% y/y) and food product shipments also increased a scant 0.1% (11.7% y/y).

Inventories in the factory sector rose 0.2% (12.8% y/y) during June, the slowest increase since May of last year. The rise was held back as lower prices caused a 1.8% decline (+46.0% y/y) in oil refineries. That led a 0.2% slip in the nondurable total. Elsewhere, inventories were depressed. Apparel inventories fell 0.9% (+19.0% y/y) and basic chemicals ticked up just 0.1% (8.0% y/y). Durable inventories rose 0.5% (12.3% y/y).

Growth in unfilled orders of 0.3% also was the slowest this year. The modest 6.6% y/y gain still masks, however, the strength of a 13.4% rise in backlogs less the transportation sector. It was led by a one-third gain in backlogs of machinery and a 19.8% gain in electrical equipment, appliances & components. Transportation industry backlogs ticked down 0.1% and rose just 2.0% y/y.

The factory sector figures are available in Haver's USECON database.

Yield Curve and Predicted GDP Growth from the Federal Reserve Bank of Cleveland is available here.

Factory Sector - NAICS Classification (%) Jun May Apr Y/Y 2010 2009 2008
Orders -0.8 0.6 -0.9 13.0 12.9 -17.7 0.5
Shipments 0.2 -0.0 -0.4 12.8 8.6 -18.5 2.3
Inventories 0.2 0.8 1.5 12.8 8.7 -6.8 -2.1
Unfilled Orders 0.3 0.9 0.6 6.6 3.9 -15.2 4.3
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