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Economy in Brief

U.S. Factory Orders, Shipments & Inventories Ease
by Tom Moeller  October 3, 2019

Factory sector activity has been under pressure. Manufacturers' orders slipped 0.1% during August (-1.9% y/y) following an unrevised 1.4% increase during July. The Action Economics Forecast survey expected a 0.5% decline. Durable goods orders inched up 0.2% (-3.0% y/y) after a 2.1% increase, unchanged from the advance report. Transportation sector orders eased 0.4% (-8.3% y/y) as nondefense aircraft & parts bookings dropped 17.1%. This decline was countered by a one-third m/m increase (-10.6% y/y) in orders for defense aircraft & parts. Electrical machinery orders dropped 1.7% (+2.8% y/y) but machinery orders improved 0.4% (-1.2% y/y).

Total shipments also eased 0.1% (-0.3% y/y). Shipments of nondurable goods, which equal orders, slipped 0.3% (-0.8% y/y), the third decline in the last four months. The value of shipments from petroleum refineries retreated 4.0% (-10.0% y/y), off for the third month in the last four, due to falling energy product prices. Textile mill shipments eased 0.4% (-3.1% y/y) and apparel shipments slipped 0.3% (-3.6% y/y). Paper product shipments improved 0.2% (0.3% y/y) while food product shipments rose 0.3% (1.2% y/y).

Shipments of durable goods edged 0.1% higher (0.2% y/y) after falling 1.2% in July. Machinery shipments increased 1.6% (1.5% y/y) but electrical equipment shipments were off 0.8% (+2.4% y/y). Transportation sector shipments declined 0.7% (-0.9% y/y) as nondefense aircraft shipments weakened 1.8% (-30.2% y/y). These shipments have been falling steadily for nine months. Shipments of electrical equipment & appliances eased 0.8% (+2.4% y/y) and computer & electronic product shipments slipped 0.4% (+2.1% y/y).

The level of unfilled orders of durable goods edged 0.1% higher (-0.9% y/y) for a second consecutive month. Backlogs in the transportation sector held steady (-1.7% y/y), also for a second straight month. Unfilled orders outside of transportation rose 0.2% (0.9% y/y). Primary metals backlogs jumped 1.3% both m/m and y/y. Unfilled orders of machinery fell 0.5% (-2.7% y/y) while computer & electronic product backlogs rose 0.1% (2.5% y/y) for a fourth straight month. Electronic equipment & appliance unfilled orders increased 0.5% (1.5% y/y) while furniture backlogs rose 0.8% (0.3% y/y).

Inventories in the factory sector remained fairly steady in August, but they strengthened 2.9% y/y. Auto inventories added 0.5% (19.7% y/y) to strong gains in six of the prior seven months. Machinery inventories eased 0.1% (+4.9% y/y) following two straight months of 0.4% increase. Electrical equipment & appliance inventories fell 0.3% (+7.1% y/y), but computer & electronic product inventories were fairly steady. Their 0.5% y/y rate of accumulation was down, however, from a 5.0% peak during all of 2017. Nondurable goods inventories eased 0.5% (-0.3% y/y) as the value of petroleum inventories declined 2.7% (-9.1% y/y). Food products inventories slipped 0.3% (+0.6% y/y). Inventories of textile products fell 1.8% (-0.2% y/y) and basic chemical product inventories eased 0.1% (+0.8% y/y).

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

Factory Sector (% chg) - NAICS Classification Aug Jul Jun Aug Y/Y 2018 2017 2016
New Orders -0.1 1.4 0.5 -1.9 7.3 5.7 -2.9
Shipments -0.1 -0.3 0.1 -0.3 6.9 5.0 -3.2
Unfilled Orders 0.1 0.1 -0.6 -0.9 3.9 1.9 -1.1
Inventories -0.0 0.1 0.1 2.9 3.5 4.5 -0.7
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