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Economy in Brief

U.S. Factory Orders Hold Steady but Backlogs Rise in August
by Tom Moeller  October 4, 2022

• Durable goods orders slip, but nondurables orders rise.

• Shipments rise broadly.

• Unfilled orders increase but inventories dip.

Total factory orders remained fairly steady (11.2% y/y) in August after falling an unrevised 1.0% during July. The latest figure was as expected in the Action Economics Forecast Survey. Shipments excluding the transportation sector rose 0.2% (10.5% y/y) following a 1.1% July decline.

Durable goods orders slipped 0.2% (+8.8% y/y) in August after easing 0.1% in July. The decline matched the figure in the advance report issued last week. The decline reflected a 1.1% drop (+14.7% y/y) in orders for transportation equipment, pulled down by an outsized drop in commercial aircraft orders. Orders for furniture & related products weakened 0.8% (+1.7% y/y) and fabricated metals orders fell 0.7% (3.7% y/y). To the upside, primary metals orders rose 0.6% (6.5% y/y). Electrical equipment, appliances & components increased 1.6% (9.1% y/y), accompanied by a 0.3% rise (7.3% y/y) in machinery orders. Orders for computers electronic products rose 0.7% (6.2% y/y).

Total shipments rose 0.5% (12.2% y/y) in August after falling 0.9% in July. Excluding transportation, shipments improved 0.2% (11.4% y/y) following a 1.3% July decline. Shipments of durable goods rose 0.8% (10.8% y/y). Shipments of electrical equipment & appliances strengthened 2.5% (10.4% y/y) and transportation equipment shipments rose 2.0% (16.5% y/y). Shipments of primary metals improved 0.3% (7.1% y/y) while shipments of computers & electronic products gained 0.4% (8.1% y/y).

Nondurable goods shipments, which equal nondurable goods orders, rose 0.2% (13.6% y/y) in August after falling 1.9% in July. The rise was led by basic chemical shipments which rose 0.9% (6.3% y/y) while plastic & rubber product shipments gained 0.7% (7.8% y/y). Paper product shipments improved 0.2% (2.0% y/y) while shipments of food products improved 0.1% (4.9% y/y). These gains were offset by a 1.1% weakening (+45.9% y/y) in shipments of petroleum & coal products. Apparel shipments declined 1.4% and were unchanged y/y.

Unfilled orders rose 0.5% (6.9% y/y) in August after a 0.7% increase in July. Excluding transportation, unfilled orders rose 0.3% (5.2% y/y), the same as in July. The August gain in unfilled orders was led by 1.0% rise (12.5% y/y) in electrical equipment, appliances & components. Transportation equipment backlogs rose 0.6% (8.1% y/y) but those of furniture & related products fell 0.6% (-1.6% y/y). Machinery backlogs rose 0.6% (8.4% y/y) and unfilled orders of primary metals gained 0.2% (-0.7% y/y).

Inventories edged 0.1% lower (8.8% y/y) in August after remaining fairly steady in July. Excluding transportation, inventories declined 0.2% (+10.4% y/y) after holding steady in July. Inventories of durable goods rose 0.2% (8.0% y/y), while inventories of nondurable goods fell 0.7% (+10.0% y/y), led by a 6.1% decline (+26.3% y/y) in petroleum & coal inventories.

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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