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Economy in Brief

U.S. Factory Orders Rebound; Inventories Strengthen
by Tom Moeller  February 4, 2020

Factory orders increased 1.8% (-0.4% y/y) during December following a 1.2% November decline, revised from -0.7% m/m. A 1.2% rise had been expected in the Action Economics Forecast Survey. Durable goods orders surged 2.4% (-3.6% y/y, the same as in the advance report issued last week. A surge in defense aircraft orders raised transportation sector orders by 7.9% (-8.2% y/y). Overall orders excluding transportation improved 0.6% (1.3% y/y). Computer & electronic product orders rose 0.7% (-1.0% y/y) but machinery orders declined 1.0% (-0.9% y/y). Furniture orders rose 0.5% (6.6% y/y).

In the nondurable goods sector, new orders (which equal shipments) strengthened 1.1% (2.9% y/y) as petroleum shipments increased 4.9% (9.9% y/y) with higher prices. Apparel shipments increased 2.6% (-1.3% y/y) but textile product shipments eased 0.5% (-6.7% y/y), off for the third straight month. Paper product shipments fell 0.4% (+0.3% y/y). In the durable goods sector, shipments eased 0.2% (-3.2% y/y), off for the sixth consecutive month. Computer & electronic equipment shipments eased 0.3% (+0.6% y/y) while electrical equipment appliance shipments rose 0.8% (4.0% y/y).

Unfilled orders in the factory sector were little changed (-2.2% y/y) in December. Backlogs of durable goods held steady and excluding transportation, unfilled orders eased slightly (-0.5% y/y) for the third month in the last four. Transportation equipment orders were unchanged (-3.0% y/y). Unfilled orders for machinery declined 0.4% (-3.8% y/y) while backlogs of electrical equipment & appliances held steady (5.3% y/y). Unfilled orders for computers & electronic products rose 0.1% (0.8% y/y).

Inventories in the factory sector strengthened 0.5% (3.3% y/y). Durable goods inventories rose 0.5% (4.8% y/y) as transportation equipment inventories gained 1.1% (14.7% y/y). Motor vehicle as well as aircraft inventories rose strongly y/y. Excluding transportation, inventories rose 0.3% (0.5% y/y). Computer & electronic product inventories gained 0.3% (1.3% y/y). but machinery inventories held steady (1.6% y/y). In the nondurable goods sector, inventories rose 0.5% (0.8% y/y). Petroleum refinery inventories surged 3.0% (9.4% y/y) for a second straight month. The gain was offset by a 1.7% decline (-2.9% y/y) in apparel inventories. Basic chemical inventories rose 0.1% (-0.6 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 Dec Nov Oct Dec Y/Y 2019 2018 2017
New Orders 1.8 -1.2 0.2 -0.4 -0.5 7.3 5.7
Shipments 0.5 0.3 0.1 -0.2 0.7 6.9 5.0
Unfilled Orders -0.0 -0.6 0.0 -2.2 -2.2 3.9 1.9
Inventories 0.5 0.3 0.2 3.3 3.3 3.5 4.5
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