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Economy in Brief

U.S. Factory Orders Continue to Grow; Shipments Also Expand
by Carol Stone, CBE  December 4, 2020

• Factory orders rise for a sixth straight month.

• Shipments extend uptrend.

• Order backlogs continue to decline while inventories turn modestly higher.

Manufacturing activity expanded further in October, with new orders increasing for a sixth straight month, this time by 1.0% (-2.8% y/y) after September's 1.3%, revised from 1.1%. The Action Economics Forecast Survey had expected an 0.8% rise in October.

Orders in the durable goods sector rose 1.3% m/m, which was down 0.2% y/y. Fabricated metal products had the largest increase, 2.3%, and transportation equipment orders increased 1.4%. Shipments of durable goods rose 1.3% (+1.2% y/y). For more details on the durable goods sector, see last week's report.

Factory shipments rose 1.0% (-2.1% y/y) in October. Nondurable goods shipments, which equal nondurable goods orders, increased 0.7% (-5.3% y/y) after rising 0.5% during September. Among the largest nondurable goods producers, basic chemical shipments rose 1.1% in October (2.0% y/y), and shipments from petroleum refineries rose 0.8% (-27.6% y/y).

Unfilled orders of durable goods eased 0.2% for a second month (October -6.6% y/y) and the eighth consecutive month without an increase. But the weakness was heavily concentrated in transportation equipment, for which order backlogs constitute 67% of the overall total for durable goods; In October, that industry group saw backlogs fall 0.6% (10.2% y/y), mostly in aircraft. Other industries saw their backlogs grow by 0.5% (+1.6% y/y)

Inventories of manufactured products rose 0.2% in October (-1.3% y/y), following a 0.1% dip in September. Durable goods stocks rose 0.2% (+0.5% y/y) and those for nondurable goods rose 0.1% (-3.9% y/y) Transportation increased 0.4% (7.1% y/y). Durable goods inventories outside of transportation rose 0.2% (--2.8% y/y). Nondurable goods inventories edged up 0.1% (-3.9% y/y) even as petroleum refinery inventories continued to decline, falling 1.9% in the month (-22.3% y/y). Chemical industry stocks rose 0.6% (+0.8% y/y).

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

Factory Sector (% chg) - NAICS Classification Oct Sep Aug Oct Y/Y 2019 2018 2017
New Orders 1.0 1.3 0.6 -2.8 -0.1 6.8 5.9
Shipments 1.0 0.5 0.3 -2.1 1.0 6.6 4.7
Unfilled Orders -0.2 -0.2 -0.6 -6.6 -1.8 3.9 2.8
Inventories 0.2 -0.1 0.0 -1.3 2.8 3.6 4.2
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