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Economy in Brief

U.S. Factory Orders & Backlogs Surge During August
by Tom Moeller  October 4, 2021

• New orders strengthen for fourth straight month.

• Shipments held back by fewer durable goods purchases.

• Inventories rise moderately.

The rate of factory-sector improvement picked up in August. New orders for manufactured goods increased 1.2% (16.0% y/y) following a 0.7% July gain, revised from 0.4%. A 1.1% increase was expected in the Action Economics Forecast Survey. The 1.5% June increase was unrevised.

Durable goods orders strengthened 1.8% (18.2% y/y) in August, unrevised from the advance report issued last week. It followed a 0.5% July increase. Transportation sector orders strengthened 5.4% (24.2% y/y), led higher by a surge in nondefense aircraft orders. Electrical equipment & appliance orders jumped 1.4% (18.1% y/y) but machinery orders fell 1.0% (18.2% y/y).

Nondurable goods orders, which equal shipments, increased 0.6% (13.9% y/y) in August, the smallest increase in four months. Shipments from petroleum refineries surged 1.1% (52.1% y/y) with higher prices. Basic chemical shipments rose 0.6% (10.7% y/y) while shipments of food products held steady (5.5% y/y). Apparel shipments eased 0.1% (+11.4% y/y) but textile product shipments rose 0.4% (6.8% y/y).

Shipments of durable goods fell 0.5% (+9.3% y/y) in August after surging 2.0% in July. Transportation equipment shipments weakened 2.8% (-0.2% y/y) while electrical equipment & appliance shipments eased 0.4% (+16.4% y/y). To the upside, computer & electronic product shipments improved 0.3% (4.3% y/y) and machinery shipments surged 1.3% (14.2% y/y) for a second consecutive month. Furniture shipments rose 0.5% (0.6% y/y).

The value of unfilled orders surged 1.0% (3.7% y/y) in August following a 0.5% July rise. Transportation sector backlogs rose 0.9% (-1.2% y/y) but excluding transportation, unfilled orders rose 1.1% (15.1% y/y). Electrical equipment order backlogs gained 1.5% (18.2% y/y) and machinery backlogs rose 1.4% (15.2% y/y). Unfilled orders for computer & electronic products rose 0.7% (3.4% y/y).

Inventories of manufactured products rose 0.6% (7.1% y/y) in August as they did in July. Transportation equipment inventories increased 0.8% (5.0% y/y) and excluding transportation, inventories gained 0.5% (7.6% y/y). Durable goods inventories increased 0.8% (7.1% y/y). Nondurable goods inventories rose 0.2% (7.1% y/y). Basic chemical inventories gained 0.3% (5.1% y/y) but apparel inventories declined 1.0% (-2.6% y/y). Petroleum inventories fell 0.5% (+32.5% y/y).

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

Strong Demand, Limited Supply, and Rising Prices: The Economics of Pandemic-Era Housing from the Federal Reserve Bank of Cleveland can be found here.

Factory Sector (% chg) - NAICS Classification Aug Jul Jun Aug Y/Y 2020 2019 2018
New Orders 1.2 0.7 1.5 16.0 -10.4 -0.2 5.7
Shipments 0.1 1.5 1.9 11.6 -6.7 -2.6 6.0
Unfilled Orders 1.0 0.5 0.8 3.7 -8.2 10.2 -1.6
Inventories 0.6 0.6 1.0 7.1 -0.5 5.3 2.8
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