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Economy in Brief

U.S. Factory Orders in September Add to August Jump
by Sandy Batten  November 2, 2018

Manufacturers' orders increased 0.7% m/m (7.9% y/y) in September, on top of an upwardly revised 2.6% m/m jump in August. The Action Economics Forecast survey had looked for a 0.5% m/m rise. This was the sixth monthly increase thus far in the nine months of 2018. Durable goods orders rose 0.7% m/m (7.8% y/y), revised down slightly from the 0.8% m/m increase in the advance report released on October 25. Besides the revision to durables goods figures, the new information in this report was for nondurable goods. Orders of nondurable goods increased 0.6% m/m (8.0% y/y) in September, the same monthly increase as in August.

The strength in overall factory orders in September was in transportation goods. Those orders were up 1.9% m/m (11.5% y/y) in September following a 13.3% m/m surge in August. As already noted in the advance report for durable goods, the major driving factor was orders for defense aircraft. (Orders for defense aircraft and parts exploded 119% m/m in September.) Excluding transportation orders, the remaining factory orders were up a more modest 0.4% m/m (7.1% y/y) in September, the same monthly increase as in August. And, excluding defense orders, remaining orders were unchanged in September (+7.1% y/y) following a 1.5% m/m jump in August.

Total factory sector shipments rose 0.9% m/m (7.9% y/y) in September following an upwardly revised 0.7% m/m increase in August. This was the fifteenth consecutive monthly increase in total shipments. Shipments of durable goods rose 1.2% m/m (7.9% y/y), revised down slightly from the 1.3% m/m increase in the advance report. Shipments of nondurable goods increased 0.6% (8.0% y/y), the same monthly increase as in August. The monthly rise in nondurables shipments was led by textile products (1.2% m/m) and petroleum and coal products (2.4% m/m).

Unfilled orders posted a solid 0.8% m/m (4.9% y/y) rise in September on top of a 0.9% m/m increase in August. Backlogs of transportation orders led the overall increase. They were up 1.0% m/m (due mostly to defense aircraft), the seventh increase in the past eight months.

Inventories at the factory level rose 0.5% m/m (4.8% y/y) in September following an upwardly revised 0.1% increase in August. Inventories of durable goods increased 0.7% m/m (4.5% y/y) after a 0.2% m/m decline in August. Inventories of nondurable goods increased 0.2% m/m (5.3% y/y), their fifteenth consecutive monthly increase. A 0.8% m/m rise in petroleum and coal product inventories accounted for almost half of the rise in nondurables inventories.

The factory sector figures are available in Haver's USECON database. The Action Economics Forecasts survey is in AS1REPNA.

Factory Sector (% chg) - NAICS Classification Sep Aug Jul Sep Y/Y 2017 2016 2015
New Orders 0.7 2.6 -0.5 7.9 5.7 -2.9 -8.2
Shipments 0.9 0.7 0.0 7.9 5.0 -3.2 -6.2
Unfilled Orders 0.8 0.9 0.1 4.9 2.0 -1.2 -2.7
Inventories 0.5 0.1 0.9 4.8 4.5 -0.7 -0.8
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