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Economy in Brief

U.S. Factory Orders Rise Stronger Than Expected in June
by Winnie Tapasanun  August 3, 2022

• New orders +2.0% in June vs. +1.8% in May, up for the ninth straight month; May orders revised up.

• Shipments gain 1.1% with rises of 2.0% in nondurable goods and 0.3% in durable goods.

• Inventories increase at a slower pace while unfilled orders rise at a faster pace.

Total factory orders rose 2.0% m/m (14.2% y/y) in June after rises of 1.8% in May (originally +1.6%) and 0.7% in April, according to the U.S. Census Bureau. The June rise registered the ninth consecutive monthly gain and the 13th in 14 months (-0.3% in September). A 1.1% m/m June increase had been expected in the Action Economics Forecast Survey. Factory orders excluding the transportation sector increased 1.4% (13.3% y/y) after a 1.8% May advance, continuing their string of gains since March 2021.

Durable goods orders increased 2.0% (11.0% y/y) in June after a 0.8% gain in May (+1.9% in the advance report for June), reflecting monthly orders rises of 5.2% (19.1% y/y) in transportation equipment, 2.8% (7.6% y/y) in electrical equipment & parts, 1.7% (6.1% y/y) in computers & electronic products, 1.2% (2.4% y/y) in furniture & related products, 0.3% (6.2% y/y) in fabricated metal products, and 0.1% (9.5% y/y) in machinery. Orders for primary metals, however, fell 1.0% (+10.8% y/y) in June, the first monthly fall since February, after a 1.9% advance in May.

Total shipments rose 1.1% (14.8% y/y) in June, the 16th straight m/m rise, after a 2.1% gain in May. Excluding transportation, shipments grew 1.4% (14.5% y/y) after a 2.0% May increase. Shipments of durable goods industries were up 0.3% (12.2% y/y), the 10th successive m/m rise, on top of a 1.5% May increase. Shipments gained in most key industry groups, notably by increases of 1.4% (7.3% y/y) in computers & electronic products and 1.3% (12.6% y/y) in electrical equipment, appliances & components. Shipments for wood products, however, slid 1.3% (+2.1% y/y), the third consecutive m/m slide; shipments for furniture & related products fell 1.0% (+6.1% y/y), the first monthly fall since December. Transportation equipment shipments held steady (+16.4% y/y) in June following three straight monthly gains.

Nondurable goods orders, which equal nondurable goods shipments, rose 2.0% (17.5% y/y) in June, the sixth consecutive m/m gain, on top of a 2.7% advance in May. The June rise reflected monthly increases of 6.0% (63.0% y/y) in petroleum & coal products, 3.3% (17.4% y/y) in beverage & tobacco products, 1.6% (11.9% y/y) in printing, 1.2% (3.5% y/y) in apparel, 1.1% (8.1% y/y) in basic chemicals, and 0.2% (4.7% y/y) in food products. In contrast, nondurable goods shipments for the following items posted m/m declines in June: leather & allied products (-4.3%; +13.5% y/y), textile products (-1.4%; +4.7% y/y), textile mills (-0.8%; +2.3% y/y), and paper products (-0.2%; +3.9% y/y). Shipments for plastic & rubber products were virtually unchanged (+9.3% y/y) in June after a 0.4% decline in May and 14 successive m/m rises.

Unfilled orders grew 0.7% (7.0% y/y) in June, the 18th straight m/m gain, after a 0.3% increase in May. Excluding transportation, unfilled orders ticked up 0.1% (6.7% y/y) for the second month. The June gain in unfilled orders was led by rises of 1.2% (7.2% y/y) in transportation equipment, 0.5% (10.6% y/y) in machinery, and 0.5% (4.1% y/y) in furniture & related products but partly offset by a 1.2% drop (+1.1% y/y) in primary metals.

Inventories increased 0.4% (10.5% y/y) in June after a 1.3% rise in May, continuing their string of increases since October 2020. Excluding transportation, inventories rose 0.5% (12.2% y/y) after a 1.6% May gain. Inventories of durable goods rose 0.4% (9.2% y/y) and inventories of nondurable goods rose 0.4% (12.5% y/y).

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

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