• Factory orders have risen in each month since May 2020.

• Inventory accumulation continues.

• Order backlogs decline further.

Manufacturing activity continues to strengthen. Factory orders rose in December for an eighth consecutive month. The 1.1% gain (-0.8% y/y) followed a 1.3% November rise, revised from 1.0%. A 0.7% December increase had been expected in the Action Economics Forecast Survey.

Durable goods orders rose 0.5% (1.9% y/y), which was revised from the 0.2% gain reported last week. Transportation sector orders eased 0.8% (-7.6% y/y) as nondefense aircraft orders fell sharply. Machinery orders strengthened 2.7% (6.5% y/y) while electrical equipment & appliance orders gained 0.7% (1.9% y/y). The full report on durable goods activity is available here.

Nondurable goods orders, which equal shipments, surged 1.7% (-3.4% y/y) after rising 1.2% during November. Shipments from petroleum refineries surged 6.3% (-24.6% y/y) as oil prices remained strong. Among other nondurable goods sectors, basic chemical shipments rose 0.6% (3.8% y/y) while paper product shipments gained 0.4% (3.7% y/y). Textile mill shipments improved 0.6% (-1.1% y/y) while apparel shipments surged 8.8% (3.4% y/y).

Shipments of durable goods improved 1.7% in December (3.7% y/y) following a 0.4% November improvement. Transportation product shipments rose 3.1% (1.9% y/y) as nondefense aircraft shipments rebounded 44.6% (-38.6% y/y) after falling 30.9%. Shipments of computers & electronic products improved 0.6% (8.7% y/y).

Inventories of manufactured products rose 0.3% in December (-0.6% y/y). Durable goods inventories eased 0.2% (+0.6% y/y) while nondurable goods inventories strengthened 1.1% (-2.4% y/y). The value of petroleum refinery inventories surged for the second straight month, up 4.9% (-19.9% y/y) while textile mill inventories gained 1.4% (-4.1% y/y). Food product inventories rose 1.0% (0.3% y/y) and basic chemical inventories gained 0.8% (1.7% y/y).

Unfilled orders eased 0.3% in December (-6.4% y/y) and have been falling since early last year. Durable goods backlogs declined 0.3% (-6.4% y/y) as unfilled orders in the transportation sector fell 1.0% (-11.0% y/y). This decline was offset by a 1.9% rise (8.9% y/y) in unfilled orders for electrical equipment & appliances.

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