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Economy in Brief

U.S. Factory Orders & Shipments Remain Strong in July
by Tom Moeller  September 2, 2020

• Factory orders strength is broad-based.

• Motor vehicle shipments are exceptionally strong.

• Inventory decumulation is widespread.

New orders for manufactured goods increased 6.4% (-6.2% y/y) during July and repeated the June gain, revised from 6.2%. A 5.8% rise had been expected in the Action Economics Forecast Survey. Orders for durable goods increased 11.4% (-4.8% y/y), revised from 11.2% in the advance report issued last month. Transportation equipment orders rose 35.7% (-12.4% y/y). Motor vehicle orders improved 9.4% (3.1% y/y) and defense aircraft bookings strengthened by three-quarters (+16.8% y/y). Electrical equipment & appliance orders rose 4.1%, but fell by the same degree y/y. Orders for fabricated metals rose strongly while machinery orders gained 2.0% (-3.2% y/y).

Nondurable goods orders, which equal shipments, rose 1.8% in July (-7.5% y/y). Shipments from petroleum refineries strengthened 7.5% (-33.8% y/y) as prices rose. Food product shipments edged 0.7% higher (1.2% y/y). Textile product shipments declined 2.8% (-13.4% y/y) but apparel shipments improved 1.0% (-4.0% y/y). Shipments of basic chemicals rose 1.1% (0.6% y/y) after rising 2.7% in June. Shipments of durable goods strengthened 7.5% (-1.3% y/y) as transportation shipments surged 17.9% (-2.9% y/y) with strength in the motor vehicle sector. Factory shipments excluding transportation rose 2.2% (-4.8% y/y). Electrical equipment & appliance shipments rose 2.0% (-4.3% y/y) for a second straight month while shipments of furniture improved 0.7% (-1.0% y/y).

Order backlogs declined 0.8% (-5.5% y/y), off for the fourth month in the last five. Transportation backlogs fell 1.1% (-7.7% y/y). Excluding the transportation sector, unfilled orders improved 0.1% (-0.3% y/y) for a second straight month. Order backlogs of electrical equipment & appliances rose 1.1% (4.9% y/y). Unfilled orders for computers & electronic products eased 0.1% (+0.9% y/y). Machinery order backlogs rose marginally (-0.4% y/y) for a second month.

Inventories of manufactured products fell 0.5% in July (-1.0% y/y). The decline was the first in three months. Transportation sector inventories eased slightly (+10.2% y/y), while outside transportation, inventories were off 0.6% (-3.7% y/y). Furniture inventories fell 0.8% (-3.9% y/y) and electrical equipment & appliance inventories eased 0.2% (-0.5% y/y). Computer & electronic product inventories fell 0.5% (+0.5% y/y) while machinery inventories declined 1.1% (-3.8% y/y), off for the sixth month this year. Inventories of nondurable products declined 0.2% (-4.5% y/y) as petroleum refinery inventories eased 0.2% (-21.9% y/y). Apparel inventories edged 0.1% lower (-1.8% y/y) but food product inventories improved 0.1% (-1.9% 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 Jul Jun May Jul Y/Y 2019 2018 2017
New Orders 6.4 6.4 7.7 -6.2 -0.2 6.9 5.6
Shipments 4.6 10.0 3.0 -4.4 0.9 6.7 4.4
Unfilled Orders -0.8 -1.4 0.0 -5.5 -1.9 3.8 2.7
Inventories -0.5 0.5 0.2 -1.0 2.8 3.7 4.3
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