• Orders increase is reduced by orders for commercial aircraft decline.

• Bookings less transportation orders remain firm.

• Shipments surge while inventories & order backlogs ease.

Factory sector activity remains on a firm footing. Manufacturers' orders for durable goods increased 0.2% during December (1.4% y/y) after strengthening 1.2% in November, revised from 0.9%. October's 1.8% rise was unrevised. A 1.0% m/m gain had been expected by the Action Economics Forecast Survey. The rise was the eighth consecutive monthly increase. New orders have risen 46.5% since the low in April.

Orders for nondefense capital goods excluding aircraft continued to firm last month, up 0.6% (8.4% y/y) following a 1.0% November gain. It was the weakest of eight consecutive monthly increases.

Orders for transportation equipment declined 1.0% (-7.9% y/y) in December after strengthening 1.9% in November. The decline was due to a sharp fall in commercial aircraft orders. Orders for motor vehicles and parts orders rose 1.4% (7.7% y/y). Offsetting the transportation decline was a 2.4% rise (5.7% y/y) in machinery orders which followed a 1.4% gain. Communications equipment orders improved 0.3% (23. 1% y/y) but computer & related product orders fell 3.4% (+6.9% y/y). Orders for primary metals rose 0.6% (1.8% y/y) and fabricated metals orders improved 0.6%. Electrical equipment orders edged 0.1% higher (1.2% y/y).

Total shipments surged 1.4% (3.4% y/y) in December after a 0.4% rise. Shipments of core capital goods rose 0.5% (6.6% y/y), the same as in November. Shipments of transportation products surged 2.7% (1.5% y/y) after improving 0.6%. Shipments excluding transportation rose 0.8% (4.3% y/y) after a 0.3% rise. Machinery shipments improved 0.8% (0.4% y/y) while electrical equipment shipments improved 0.7% (-1.7% y/y).

Unfilled orders for durable goods eased 0.3% (-6.5% y/y) and have been falling since September 2018. Excluding transportation, order backlogs rose 1.0% (3.7% y/y), the same as in November.

Inventories of durable goods edged 0.2 % lower (+0.6% y/y) following three straight monthly increases. Excluding transportation, inventories increased 0.8% (-1.5% y/y), the largest of four consecutive monthly gains.

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.