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Economy in Brief

U.S. Factory Orders Retreat as Durable Goods Orders Backpedal
by Tom Moeller  June 4, 2019

Manufacturers' orders declined 0.8% (+1.0% y/y) during April following a 1.3% March gain, revised from 1.9%. Orders in February declined 1.0%, revised from -0.3%. A 0.9% April decline had been expected in the Action Economics Forecast Survey. Orders for durable goods fell 2.1% and were unchanged y/y. The decline was unrevised from the advance report. Transportation equipment orders fell 5.9% (-0.1% y/y), led by a one-quarter decline in civilian aircraft & parts orders. Factory orders excluding the transportation sector improved 0.3% (1.2% y/y). Electrical equipment & parts orders rose 0.9% (3.4% y/y) after three months of stronger gains while machinery bookings improved 0.3% (0.2% y/y) after a 2.0% decline.

Orders for nondurable goods, which equal shipments, increased 0.5% in April (2.0% y/y) following a 0.9% rise. Shipments outside of the transportation sector rose 0.2% (1.9% y/y), down from 8.8% y/y as of last June. Petroleum shipments strengthened 2.0% (5.9% y/y) with higher prices. Food product shipments rose 0.8% (-0.3% y/y) but apparel demand eased 0.8% (0.5% y/y), down for the fourth straight month. Shipments of textile products fell 1.2% (unchanged y/y) and basic chemical shipments eased 0.9% (+2.5% y/y). Shipments of durable goods declined 1.5% (+2.4% y/y). Computer & electronic product shipments rose 1.0% (5.6% y/y) but electrical equipment shipments gained just 0.1% (2.9% y/y). Transportation equipment shipments declined 4.1% (+3.7% y/y) due to a 16.1% decline (+3.5% y/y) in civilian aircraft shipments.

Order backlogs in the manufacturing sector slipped 0.1% (+2.1% y/y) and reversed the March gain. Transportation equipment backlogs were little changed (1.9% y/y) after a 0.2% rise. Unfilled orders outside of transportation eased 0.1% (+2.7% y/y), the third straight month of slight decline. Order backlogs of electrical equipment & appliances rose 0.7% (0.4% y/y) while computer & electronic component backlogs held steady (3.7% y/y). Unfilled orders for primary metals declined 0.5% (+5.4% y/y). Unfilled orders for fabricated metals eased 0.1% (+4.0% y/y). Machinery order backlogs slipped 0.2% (+0.5% y/y), down for the sixth straight month.

Factory inventories increased 0.3% (3.8% y/y) in April after rising 0.4% during March. Transportation sector inventories strengthened 1.1% (5.6% y/y) and inventories outside of the transportation sector rose 0.1% (3.4% y/y). Electrical equipment inventories rose 0.2% (10.5% y/y), the weakest monthly rise in a year. Computer & electronic product inventories eased slightly (0.3% y/y). Machinery inventories strengthened 0.2% (5.8% y/y). Inventories of primary metals rose 0.2% (6.2% y/y) while electrical equipment inventories also rose 0.2% (10.5% y/y).

The factory sector figures are available in Haver's USECON database. The expectation figure is in the AS1REPNA database.

"Opening Remarks" from Fed Chairman Jerome H. Powell at the Monetary Policy Strategy, Tools, and Communications Practices conference can be found here.

Factory Sector (% chg) - NAICS Classification Apr Mar Feb Apr Y/Y 2018 2017 2016
New Orders -0.8 1.3 -1.0 1.0 7.3 5.7 -2.9
Shipments -0.5 0.2 0.3 2.2 6.9 5.0 -3.2
Unfilled Orders -0.1 0.1 -0.4 2.1 3.9 1.9 -1.1
Inventories 0.3 0.4 0.3 3.8 3.5 4.5 -0.7
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