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Economy in Brief

U.S. Factory Sector Activity Cools Off
by Tom Moeller  April 8, 2019

Manufacturers' orders declined 0.5% (+1.5% y/y) during February following little change during January, revised from 0.1%. A 0.1% uptick in orders had been expected in the Action Economics Forecast Survey. Orders for durable goods weakened 1.6 % (8.4% y/y), unrevised from the advance report issued last week. A 4.4% decline (-0.6% y/y) in transportation equipment orders paced the decline as civilian aircraft & parts orders fell by roughly one-third. Factory orders excluding the transportation sector improved 0.3% (1.9 % y/y) following three straight months of decline. Electrical equipment & parts orders gained 1.0% (4.2% y/y) but machinery bookings fell 0.6% (+0.5% y/y).

Orders for nondurable goods, which equal shipments, increased 0.6% (1.1% y/y) following three straight months of decline. Shipments outside of the transportation sector rose 0.5% with y/y growth of 2.2%, down from 8.8% y/y as of last June. That reduced rate of increase came despite a 3.2% jump in petroleum shipments as prices strengthened. Food product shipments also improved 0.5% (-0.4% y/y) but apparel demand weakened 1.4% (+1.5% y/y), about the same as in January. Textile product demand fell 0.6% (+5.6% y/y) and the call for basic chemicals eased 0.1% (+3.6% y/y). Shipments of durable goods improved 0.2% (5.5% y/y). Computer & electronic product shipments gained 1.0% (6.5% y/y) and electrical equipment shipments rose 0.4% (3.8% y/y). These gains were offset by a 0.3% decline (+8.5% y/y) in transportation shipments.

Order backlogs in the manufacturing sector fell 0.3% (+3.5% y/y), down for the fourth month in the last five. Transportation equipment backlogs declined 0.4% (+3.0% y/y). Unfilled orders outside of transportation were little changed (+4.5% y/y). The backlog of orders for electrical equipment & appliances declined 0.2% (+1.1% y/y) while computer & electronic component backlogs eased 0.1% (+3.7% y/y). Unfilled orders for primary metals strengthened 0.3% (11.5% y/y) while unfilled orders for fabricated metals also rose 0.%, and by a steady 7.8% y/y.

Factory inventories increased 0.3% (3.6% y/y) after rising 0.5% during January. Transportation sector inventories strengthened 1.0% (4.1% y/y) and inventories outside of transportation ticked 0.1% higher (3.5% y/y). Electrical equipment inventories jumped 0.8% (9.3% y/y) following three straight months of similar strength. Computer & electronic product inventories improved 0.1% but the 0.3% y/y rise compares to 5.1% y/y growth as of December 2017. Computer & electronic product inventories improved 0.1% (0.2% y/y). Primary metals inventories declined 0.4%, but rose a steady 8.4% y/y, while machinery inventories slipped 0.1% (+5.2% y/y).

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

Factory Sector (% chg) - NAICS Classification Feb Jan Dec Feb Y/Y 2018 2017 2016
New Orders -0.5 -0.0 0.1 1.5 7.2 5.7 -2.9
Shipments 0.4 -0.3 -0.2 3.3 6.8 5.0 -3.2
Unfilled Orders -0.3 0.1 -0.1 3.5 3.8 2.0 -1.2
Inventories 0.3 0.5 0.1 3.6 3.5 4.5 -0.7
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