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Economy in Brief

Even Larger Decline in U.S. Factory Orders and Shipments in April
by Sandy Batten  June 3, 2020

• A second large factory orders decline led by durable goods.

• Shipments fall even more in April than in March.

• Inventory liquidation continues--in nondurable goods.

U.S. factory orders and shipments posted even larger declines in April than they had in March as the widespread economic lockdown took a larger toll. Orders slumped 13.0% m/m (-22.3% y/y) in April on top of a downwardly revised 11.0% m/m decline in March (originally -10.3% m/m). However, the April decline in orders was not as bad as the market had expected--the Action Economics Forecast panel had looked for a 14.0% m/m drop. The drop in shipments in April was even steeper than both their decline in March and the April decline in orders. Shipments plummeted 13.5% m/m in April (-18.9% y/y) following a 5.5% m/m decline in March.

As in March, the April weakness was led by a sharp decline in durable goods orders which again reflected a collapse in transportation orders. Orders for durable goods fell 17.7% m/m (-29.8% y/y) in April after a 16.7% m/m drop in March. Transportation orders plummeted 48.3% m/m in April following a 43.2% monthly plunge in March. In March and April transportation orders were down a whopping 71%. Durable goods orders fell in every major category. However, orders for computers were down only 0.1% m/m. Orders for nondurable goods, the really new information in this report, slumped 9.0% m/m (-15.3% y/y) in April, an even bigger decline than their 5.4% m/m drop in March.

The increased weakness in shipments in April was also led by shipments of durable goods which fell 18.2% m/m (-22.7% y/y) after a 5.5% m/m decline in March. Again transportation was the major factor. Transportation shipments fell 43.1% m/m in April with shipments of automobiles plummeting 91.7% m/m. Shipments of nondurable goods were also weak, but less so than shipments of durables. Nondurable shipments fell 9.0% m/m (-15.3% y/y) in April due mostly to a drop in petroleum shipments. The 32.0% m/m fall in petroleum shipments accounted for more than one half of the April decline in total shipments of nondurables.

Unfilled orders for manufactured products fell 1.6% m/m (-4.8% y/y) in April on top of a 2.1% m/m decline in March. Transportation sector backlogs declined 2.0% m/m. Excluding transportation, unfilled orders eased 0.5% m/m.

Factory sector inventories fell in April for the fourth consecutive month, declining 0.4% m/m (-0.6% y/y) in April. Inventories of durable goods rose 0.2% m/m (3.2% y/y) following a 0.5% m/m increase in March. In contrast, inventories of nondurable goods declined 1.2% m/m (-6.3% y/y) on top of a 3.5% m/m drop in March, the largest monthly decline in more than a decade.

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

Factory Sector (% chg) - NAICS Classification Apr Mar Feb Apr Y/Y 2019 2018 2017
New Orders -13.0 -11.0 0.2 -22.3 -0.5 7.3 5.7
Shipments -13.5 -5.5 -0.4 -18.9 0.7 6.9 5.0
Unfilled Orders -1.6 -2.1 0.3 -4.8 -2.1 3.9 1.9
Inventories -0.4 -1.1 -0.4 -0.6 3.1 3.5 4.5
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