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Economy in Brief

U.S. Factory Orders Rise More Than Expected in October
by Winnie Tapasanun  December 3, 2021

• New orders rise for the sixth straight month.

• Shipments gain 2.0% with rises of 2.4% in nondurable goods and 1.6% in durable goods.

• Inventories and unfilled orders increase but at a slower pace.

Total factory orders rose 1.0% m/m (15.2% y/y) in October after rises of 0.5% in September (originally 0.2%) and 1.0% in August (originally 1.0%), according to the U.S. Census Bureau. A 0.5% October increase had been expected in the Action Economics Forecast Survey. The October rise registered the sixth consecutive monthly gain following April’s 0.1% dip. Factory orders excluding the transportation sector advanced 1.6% (15.4% y/y), the eighth straight m/m gain, after a 1.1% increase.

Durable goods orders fell 0.4% (+13.7% y/y) in October following a 0.4% fall in September and four successive monthly rises. Transportation equipment orders dropped 2.6% (+14.2% y/y), led by monthly orders drops in ships & boats (-23.8%), defense aircraft & parts (-21.8%) and nondefense aircraft & parts (-14.5%). Machinery orders fell 0.7% (+17.0% y/y), reversing a 1.5% September gain. Orders for furniture slid 0.5% (+2.1% y/y), the third m/m slide in four months. To the upside, primary metal orders rose 1.7% (25.1% y/y), the seventh m/m rise in eight months. Electrical equipment & parts orders grew 1.4% (18.3% y/y), the third straight m/m gain. Orders for computers & electronic products rebounded 0.8% (3.9% y/y), the largest m/m gain since June, after a 0.2% decline. Orders for fabricated metal products increased 0.3% (16.3% y/y), the fourth successive m/m gain.

Total shipments rose 2.0% (13.0% y/y) in October, the eighth straight m/m rise and the largest since March, after a 1.0% increase in September. Excluding transportation, shipments grew 1.8% (15.3% y/y) after a 1.2% gain. Shipments of durable goods industries rose 1.6% (9.5% y/y), the fifth m/m rise in six months, after a 0.6% rebound. Shipments gained across all key industry groups, notably by a 3.2% rebound (1.0% y/y) in transportation equipment, with the exception of declines of 0.3% (+14.4% y/y) in machinery and 0.2% (+2.8% y/y) in computer & electronic products.

Nondurable goods orders, which equal nondurable goods shipments, increased 2.4% (16.8% y/y) in October, the largest m/m gain since July 2020, on top of a 1.3% rise in September. The October increase was led by rises of 8.5% (65.3% y/y) in petroleum & coal products, 2.9% (2.9% y/y) in printing, 1.8% (12.1% y/y) in basic chemicals, 1.6% (7.5% y/y) in plastic & rubber products, 1.5% (8.8% y/y) in textile mills, and 0.1% (4.8% y/y) in food products. In contrast, nondurable goods shipments for the following items posted m/m drops in October: leather & allied products (-5.1%; +8.9% y/y), beverages & tobacco products (-1.7%; +8.6% y/y), textile products (-0.6%; +5.6% y/y), and apparel (-0.1%; +5.4% y/y).

The value of unfilled orders increased 0.3% (5.5% y/y) in October, the smallest m/m gain in nine months, after a 0.7% rise in September. Excluding transportation, unfilled orders rose 0.7% (15.3% y/y) after a 1.0% increase. The October increase was led by gains of 1.8% (21.2% y/y) in electrical equipment, appliances & components, 1.3% (16.9% y/y) in machinery, 0.6% (24.1% y/y) in fabricated metal products, and 0.5% (4.2% y/y) in computer & electronic products but offset by a 0.3% drop (+22.8% y/y) in primary metals.

Inventories rose 0.8% (9.0% y/y) in October, the 13th straight m/m rise, after a 1.0% increase in September. Excluding transportation, inventories grew 1.1% (10.3% y/y) after a 1.1% gain. Inventories of durable goods increased 0.7% (8.5% y/y) and inventories of nondurable goods advanced 1.1% (9.8% y/y).

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

Factory Sector (% chg) - NAICS Classification Oct Sep Aug Oct Y/Y 2020 2019 2018
New Orders 1.0 0.5 1.0 15.2 -10.4 -0.2 5.7
Shipments 2.0 1.0 0.1 13.0 -6.7 -2.6 6.0
Unfilled Orders 0.3 0.7 0.9 5.5 -8.2 10.2 -1.6
Inventories 0.8 1.0 0.7 9.0 -0.5 5.3 2.8
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