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Economy in Brief

U.S. Factory Orders Posted a Modest Decline in December
by Kathleen Stephansen, CBE  February 3, 2022

• New orders for manufacturing goods dropped in December following seven consecutive monthly gains.

• Shipments were up 19 of the last twenty months.

• Both unfilled orders and inventories rose again during December.

Total factory orders declined 0.4% m/m (13.3% y/y) in December, following a 1.8% m/m (15.8% y/y) rise in November, revised up from an initial rise of 1.6% m/m (15.5% y/y). The December drop was the first monthly one since April of last year. The Action Economics Forecast Survey expected a 0.3% m/m decline. Much of the decline reflected a drop in transportation orders. Orders excluding transportation rose a modest 0.1% m/m (13.0% y/y), down from the 0.8% m/m (15.1% y/y) rise in November.

Durable goods orders dropped 0.7% m/m (13.0% y/y) during December, up from a previously published decline of 0.9% m/m (12.7% y/y) and following two consecutive monthly increases. November orders rose 3.2% m/m (15.5% y/y). Transportation equipment orders declined 3.7% m/m (14.9% y/y), revised from an initially published drop of 3.9% and following a rise of 8.2% m/m in November. Orders for computers and electronic products also declined 2.7% m/m (5.0% y/y) during December, following a 4.2% m/m rise in November. Other components posted small increases, notably primary metals orders, rising 2.1% m/m (22.9% y/y) following a slight 0.1% m/m retrenchment in November.

New orders for nondurable goods declined 0.2% m/m (13.7% y/y) in December, following a 0.5% m/m (16.1% y/y) rise in November.

Total shipments rose 0.4% m/m (11.3% y/y) in December, revised slightly up from the previously published increase of 0.3%. This follows a rise of 0.7% m/m (13.0% y/y) in November. Excluding transportation shipments, shipments increased 0.2% m/m (13.3% y/y), following a 0.5% m/m (14.8% y/y) gain in November. Shipments of durable goods rose 1.0% m/m (9.0% y/y) in December, following a 0.8% m/m (10.0% y/y) rise in November. Transportation equipment, up three consecutive months, led the overall increase, up 1.2% m/m (1.0% y/y), following a 1.4% m/m in November. Nondurable goods shipments declined 0.2% m/m (13.7% y/y), after a 0.5% m/m rise in November. Petroleum and coal products, down following seven consecutive monthly increases, drove the decrease with a 2.1% m/m (43.5% y/y) drop.

Unfilled orders increased rose 0.5% m/m (7.4% y/y) in December, after a 0.8% m/m (6.6% y/y) rise in November. They are up 11 consecutive months. Excluding transportation, unfilled orders rose 0.8% m/m (15.0% y/y), following a 0.9% m/m (15.4% y/y) rise in November. Gains were widespread, led by increases in transportation (0.3% m/m), in fabricated metals (0.8% m/m) and electric equipment and appliances (1.3% m/m).

Inventories of manufactured goods were up 18 of the last 19 months, posting a rise of 0.3% m/m (8.9% y/y) in December, following a 0.8% m/m (9.1% y/y) in November. Durable goods inventories rose 0.8% while nondurable goods inventories dropped 0.4% in December, following rises of 0.8% in both durable and nondurable goods inventories during November.

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 Dec Nov Oct Dec Y/Y 2021 2020 2019
New Orders -0.4 1.8 1.2 13.3 16.7 -10.4 -0.2
Shipments 0.4 0.7 2.0 11.3 12.7 -6.7 -2.6
Unfilled Orders 0.5 0.8 0.3 7.4 7.4 -8.2 10.2
Inventories 0.3 0.8 0.9 8.9 8.9 -0.5 5.3
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