• Factory orders rise for fifth straight month.

• Shipments gain steadily.

• Order backlogs slip while inventories hold steady, again.

Activity in the factory sector continues to recover. Manufacturers' orders strengthened 1.1% during September following a 0.6% August rise, revised from 0.7%. A 0.9% gain had been expected in the Action Economics Forecast Survey. The 3.9% y/y orders decline during September compares to a 5.9% y/y shortfall in factory sector production.

Orders in the durable goods sector improved 1.9% (-1.8% y/y), unrevised from last week's advance report. That followed a 0.4% August gain. Both increases were sharply below the gains logged early in the recovery. The rise was boosted by a 4.1% increase in transportation sector bookings as nondefense aircraft orders surged. Shipments of durable goods rose 0.4% (-0.5% y/y). For more details on the durable goods sector, see last week's report.

Factory shipments rose 0.3% (-3.3% y/y) in September for the second straight month. Nondurable goods shipments, which equal nondurable goods orders, increased 0.3% (-6.0% y/y) after rising 0.8% during August. Apparel shipments surged 4.9% (-2.5% y/y) following a 3.6% drop. Textile product shipments also were strong, posting a 2.7% rise (-6.1% y/y) after a 4.1% jump. Elsewhere, shipments were mixed. Food product shipments rose 0.3% (0.6% y/y) and paper product shipments edged just 0.1% higher (1.6% y/y). Shipments from petroleum refineries eased 0.1% (-29.1% y/y).

Unfilled orders of durable goods weakened 0.2% (-6.3% y/y), off for the sixth month this year. Transportation equipment backlogs fell 0.7% (-9.5% y/y). Excluding the transportation sector, unfilled orders increased 0.7% (0.9% y/y). Computer & electronic backlogs held steady (0.5% y/y) while machinery grew 0.6% (1.4% y/y).

Inventories of manufactured products were unchanged in September (-1.2% y/y) as durable goods inventories, which are roughly 60% of total inventories, rose 0.3% (0.6% y/y). Transportation increased 0.6% (8.2% y/y). Inventories outside of transportation edged down 0.1% (-3.6% y/y) for the second straight month. Nondurable goods inventories were off 0.5% (-4.0% y/y) as petroleum refinery inventories fell 6.2% (-21.7% y/y). Apparel inventories fell 0.6% (-3.7 y/y), off for the fifth strait month.

All these factory sector figures and West Texas intermediate oil prices are available in Haver's USECON database.