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Economy in Brief
U.S. ISM Services Index Weakens in February
The ISM Composite Index of Services Activity declined to 55.3 during February...
U.S. Mortgage Applications Edge Up
The MBA Mortgage Loan Applications Index edged up 0.5% w/w (5.4% y/y) in the week ended February 26...
U.S. Light Vehicle Sales Weaken in February
Sales of light vehicles declined 5.6% during February (-6.7% y/y) to 15.88 million units...
U.S. Gasoline & Crude Oil Prices Continue to Strengthen
The price of regular gasoline strengthened to $2.71 per gallon (11.9% y/y) in the week ended March 1...
Post Covid-19 Turbulence Rocks and Weakens German Retail Sales
German and other European retail sales have been put through a sort of test of fire in the wake of the covid-19 virus arrival...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Gerald D. Cohen February 27, 2019 Manufacturers' orders edged up 0.1% (2.4% year-on-year) in December following a slightly upwardly-revised 0.5% decline in November (this report was delayed as a result of the government shutdown). The Action Economics Forecast survey looked for a 0.5% rise. Factory shipments shrank 0.2% (4.1% y/y), the third consecutive monthly decrease. Despite this weakness, shipments rose at a 0.8% annual rate in Q4 as strong August data created a healthy starting point for the quarter.
Orders in the volatile durable goods sector increased 1.2% (3.4% y/y) after a 0.9% gain in November. Orders for transportation equipment rose 3.2% (3.2% y/y) due to a 28.4% takeoff in volatile civilian aircraft bookings (-27.2% y/y). Total factory orders excluding transportation declined 0.6% (+2.2% y/y). Fabricated metal orders continued its strong quarter up 0.4% in December (6.0% y/y). Machinery orders decreased 1.0% (-0.4% y/y) after a 2.0% drop. Orders for computers & electronic products edged up 0.1% (7.8% y/y).
Shipments of durable goods grew 0.7% (6.9% y/y) in December. Shipments of transportation equipment increased 1.6% (12.2% y/y) driven by a 2.5% gain in passenger car and light trucks (15.4% y/y). Fabricated metal shipments increased 1.1% (7.2% y/y), while machinery declined 0.5% (+1.5% y/y). Computer & electronic product shipments rose 0.6% (7.0% y/y).
Nondurable goods shipments, which equal nondurable goods orders because nondurables are shipped in the same period they are ordered, declined 1.0% (+1.4% y/y). This decrease was driven a 5.5% drop in shipments from petroleum refineries (-2.7% y/y). Energy prices, in particular oil prices, have a significant role on the value of energy product activity in this report. West Texas intermediate oil prices plummeted 15.1% in the year ending December. Orders for the largest nondurable category, basic chemicals, rose 0.3% (4.1% y/y), food products, the second largest, decreased 0.3% (0.6% y/y).
Unfilled orders of durable goods, which as implied above equals unfilled factory orders, edged down 0.1% (+3.8% y/y). Transportation equipment backlogs decreased 0.2% (+3.5% y/y). Excluding the transportation sector, unfilled orders inched up 0.1% (4.6% y/y). Non-transportation unfilled orders have been on a steady rise since early 2017. Computer & electronic sector backlogs increased 0.3% (3.8% y/y), while machinery declined 0.3% (+2.3% y/y).
Inventories of manufactured products were unchanged in December (3.4% y/y) as durable goods inventories - which are roughly 60% of total inventories - rose 0.3% (4.6% y/y). Transportation ticked down 0.1% (+2.7% y/y). Inventories outside of transportation were unchanged (3.5% y/y). The machinery sector rose 0.3% (5.0% y/y) and fabricated metals increased 0.2% (7.8% y/y). Nondurable goods inventories declined 0.4% (+1.6% y/y) as petroleum refineries dropped 5.2% (-7.9% y/y). Basic chemical inventories decreased 0.3% (+4.3% y/y), while food product inventories grew 0.4% (-1.8% y/y).
All these factory sector figures and West Texas intermediate oil prices are available in Haver's USECON database.
Factory Sector (% chg) - NAICS Classification | Dec | Nov | Oct | Dec Y/Y | 2018 | 2017 | 2016 |
---|---|---|---|---|---|---|---|
New Orders | 0.1 | -0.5 | -2.1 | 2.4 | 7.2 | 5.7 | -2.9 |
Shipments | -0.2 | -0.5 | -0.1 | 4.1 | 6.8 | 5.0 | -3.2 |
Unfilled Orders | -0.1 | -0.2 | -0.2 | 3.8 | 3.8 | 2.0 | -1.2 |
Inventories | 0.0 | -0.1 | 0.2 | 3.4 | 3.4 | 4.5 | -0.7 |