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Economy in Brief

U.S. Factory Sector Orders Pull Back but Inventories Continue to Increase
by Tom Moeller  July 2, 2014

New orders to all manufacturers declined 0.5% (+2.4% y/y) in May following a 0.8% increase during April, revised from 0.7%. A 0.3% decline was expected in the Action Economics Forecast Survey. A 0.9% decline (+2.9% y/y) in durable goods orders led the total lower. Factory sector orders excluding transportation equipment dipped 0.1% (+3.0% y/y) after three months of firm increase. Orders for nondurable goods (which equal shipments) fell 0.2% (+2.0% y/y) and these orders have been moving sideways all year. Shipments from chemical plants were off 1.0% (-2.9% y/y) while textile mill shipments declined 0.6% (+2.2% y/y). Shipments of plastics & rubber rebounded 0.6% (3.4% y/y).

Inventories in the factory sector firmed 0.8% (3.8% y/y), the strongest gain since October 2011. In the durable goods sector, inventories rose 0.9% (5.4% y/y) led by a 2.2% rise (4.8% y/y) in computers & electronic products. Amongst nondurable goods industries, inventories increased 0.6% (1.4% y/y). The gain was paced by a 2.1% jump (24.2% y/y) in apparel, a 1.5% improvement (6.6% y/y) in printing and a 1.5% increase (4.4% y/y) in petroleum inventories.

Unfilled orders increased 0.6% (7.9% y/y), strong for the third consecutive month. Excluding the transportation sector, order backlogs rose 0.5% (5.8% y/y). Backlogs of electrical equipment gained 1.1% (10.3% y/y) and unfilled orders of transportation equipment improved 0.7% (9.2% y/y). Unfilled orders of furniture rose 0.6% (4.5% y/y) while backlogs in the machinery sector also rose 0.6% (11.3% y/y).

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

Factory Sector- NAICS Classification May Apr Mar Y/Y 2013 2012 2011
New Orders -0.5 0.8 1.5 2.4 2.7 2.9 12.9
Shipments 0.1 0.4 0.4 2.9 2.1 4.0 12.1
Inventories 0.8 0.5 0.2 3.8 2.3 2.4 10.2
Unfilled Orders 0.6 0.9 0.8 7.9 7.0 3.7 10.0
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