• Orders increase solidly for second month.

• Increased shipments again paced by petroleum.

• Order backlogs and inventories strengthen again.

Factory sector activity continues to strengthen. New orders for manufactured goods increased 1.5% (22.3% y/y) during June following a 2.3% gain during May, revised from 1.7%. A 1.0% increase was expected in the Action Economics Forecast Survey. The 0.1% dip during April was unrevised.

Durable goods orders rose 0.9% (29.4% y/y) last month following a 3.2% May increase, revised from 2.3% reported earlier. The June increase was 0.8% in the advance report. Transportation sector orders rose 2.0% (59.3% y/y) following a 10.0% gain. Machinery orders increased 1.0% (21.2% y/y) while electrical equipment orders edged 0.3% higher (24.5% y/y).

Nondurable goods orders, which equal shipments, increased 2.1% (15.7% y/y) in June after rising 1.4% in May. Shipments from petroleum refineries surged 8.9% (67.0% y/y) with higher prices. Basic chemical shipments rose 0.8% (10.9% y/y) and apparel shipments rose 0.9% (9.6% y/y). Textile product shipments rose 0.2% (7.9% y/y) while shipments of food products rose 0.4% (6.2% y/y).

Shipments of durable goods rose 1.0% (15.2% y/y) in June after gaining 0.4% in May. Transportation equipment shipments rose 1.1% (12.4% y/y) while furniture shipments rose 0.7% (0.1% y/y). Electrical equipment & appliance shipments improved 1.0% (17.4% y/y) but computer & electronic product shipments eased 0.2% (+7.8% y/y).

The value of unfilled orders rose 1.0% (0.9% y/y) in June for the second consecutive month. Unfilled orders of durable goods also rose 1.0% (0.9% y/y). Transportation sector backlogs rose 0.7% (-4.4% y/y) and excluding transportation, unfilled orders rose 1.4% (13.4% y/y). Electrical equipment order backlogs rose 2.0% (18.3% y/y).

Inventories of manufactured products rose 1.0% (5.5% y/y) in June following a 1.1% May rise. Transportation equipment inventories rose 0.9% (3.8% y/y) and excluding transportation, inventories rose 1.0% (5.9% y/y). Durable goods inventories increased 0.9% (4.6% y/y). Nondurable goods inventories rose 1.1% (6.8% y/y) as petroleum inventories increased 5.4% (37.6% y/y). Basic chemical inventories rose 0.3% (5.3% y/y) and apparel inventories rose 1.2% (-0.3% y/y).

The factory sector data are available in USECON database. The Action Economics Forecast Survey is in the AS1REPNA database.