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Economy in Brief

U.S. Factory Orders Slump in November
by Sandy Batten  January 7, 2020

Factory orders decreased 0.7% m/m (-1.5% y/y) in November following a slightly downwardly revised 0.2% m/m increase in October (initially reported as +0.3% m/m). This was the third monthly decline in the past four months. The November weakness had been generally expected after the advance report on durable goods orders released previously, which showed a 2.0% m/m decline in those orders. The Action Economics Forecast Survey had looked for a 0.8% m/m decline in total orders in November. The initially reported 2.0% m/m decline in orders for durable goods was revised down slightly to -2.1% m/m. A 35.5% m/m plunge in orders for aircraft was a leading factor behind the November decline in both factory and durables goods orders. Total orders excluding transportation were up 0.3% m/m in November, led by increases in orders for electrical equipment (+2.0% m/m), furniture (+1.0% m/m) and nondurable goods (the new information in this report, which rose 0.6% m/m).

Total shipments rose 0.3% m/m (-0.8% y/y) in November following a modest 0.1% m/m increase in October, which followed three consecutive monthly declines. Shipments of durable goods were unchanged in November while shipments of nondurable goods (which equals orders) rose a solid 0.6% m/m (0.9% y/y) on top of a 0.3% m/m rise in October. However, the November increase was not widely spread, but rather was concentrated in a 2.7% m/m increase in orders for petroleum products that accounted for 88% of the increase in nondurable shipments/orders. Shipments fell in six of the ten major categories.

Unfilled orders in the factory sector fell 0.4% m/m (-2.0% y/y) in November after having been unchanged in October. All unfilled orders are for durable goods. Almost all of the November decline in overall unfilled orders was due a 0.6% m/m drop in unfilled transportation orders (largely unfilled defense aircraft orders, -2.6% m/m).

Total factory inventories increased 0.3% m/m (+2.7% y/y) in November for the third consecutive monthly increase. Inventories of durable goods rose 0.4% m/m while inventories of nondurable goods edged up 0.1% m/m. This was the fifteenth consecutive monthly increase in durable goods inventories. The November increase in durables inventories was led by a 1.9% m/m jump in inventories of nondefense aircraft and parts. November nondurables inventories was dominated by a 2.2% increase in inventories at petroleum refineries.

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

Factory Sector (% chg) - NAICS Classification Nov Oct Sep Nov Y/Y 2018 2017 2016
New Orders -0.7 0.2 -0.8 -1.5 7.3 5.7 -2.9
Shipments 0.3 0.1 -0.4 -0.8 6.9 5.0 -3.2
Unfilled Orders -0.4 0.0 0.0 -2.0 3.9 1.9 -1.1
Inventories 0.3 0.2 0.3 2.7 3.5 4.5 -0.7
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