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Economy in Brief

U.S. Factory Sector Orders Improve in 2014 but Weaken Near Yearend
by Tom Moeller  February 3, 2015

During all of last year, new orders to manufacturers rose a steady 2.8%. During December, however, forward momentum lost steam. New orders fell 3.4% (-3.6% y/y) following a revised 1.7% November decline, last month reported as -0.7%. The decline was the fifth consecutive drop and exceeded expectations in the Action Economics Forecast Survey for a 2.2% shortfall.

Durable goods orders declined 3.3% last month and were up 0.4% y/y. This report included slight revisions to the advance durable goods figures. Industry declines were widespread. Transportation orders fell 9.1% (-7.1% y/y), machinery orders declined 3.2% (-5.6% y/y) and computers & electronic equipment orders fell 1.6% (+6.4% y/y). Electrical equipment bookings, however, improved 1.0% (2.1% y/y). Orders for nondurable goods (which equal shipments) declined 3.4% (-7.1% y/y) as the value of petroleum shipments fell 15.7% (-29.9% y/y) due to lower prices. Basic chemical shipments declined 0.3% (-4.4% y/y). To the upside, apparel shipments rose 1.7% (16.9% y/y) and food product shipments gained 0.8% (5.7% y/y). Durable goods shipments improved 1.3% (6.0% y/y) led by a 3.7% rise (10.6% y/y) in transportation equipment shipments. Electrical equipment & appliance shipments slipped 0.1% (+4.5% y/y).

Unfilled orders declined 0.8% (+10.1% y/y) while backlogs excluding the transportation sector were off 0.3% (+6.2% y/y). Machinery backlogs declined 1.1% (+7.3% y/y) and unfilled orders for transportation equipment fell 1.1% (+12.4% y/y). Order backlogs of computers & electronic products gained 0.4% (7.1% y/y) while unfilled orders of furniture improved 0.8% (9.8% y/y).

Inventories were off 0.3% (+2.7% y/y), the first monthly decline since May 2014. Inventories excluding the transportation sector fell 0.5% (+1.0% y/y). Nondurable goods inventories led the decline with a 1.5% fall (-2.1% y/y) that reflected an 8.8% drop (-19.2% y/y) in petroleum inventories. Basic chemical inventories fell 0.6% (+0.3% y/y) but apparel inventories gained 0.5% (24.2% y/y). Textile mill inventories improved 0.5% (2.9% y/y) and paper products inventories rose 0.3% (2.8% y/y).

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

Factory Sector- NAICS Classification (%) Dec Nov Oct Y/Y 2014 2013 2012
New Orders -3.4 -1.7 -0.7 -3.6 2.8 2.7 2.9
Shipments -1.1 -1.0 -0.9 -0.9 2.2 2.0 4.0
Inventories -0.3 0.0 0.1 2.7 2.7 2.3 2.4
Unfilled Orders -0.8 0.2 0.5 10.1 10.1 7.0 3.7
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