Global| Mar 06 2006U.S. Factory Inventories Up, Orders Drop Belies Factory Strength
by:Tom Moeller
|in:Economy in Brief
Summary
Factory inventories grew 0.5% in January following an upwardly revised 0.6% increase during December. Though the rate of inventory accumulation slowed sharply during the last year, the 3.5% y/y growth contrasts with outright [...]
Factory inventories grew 0.5% in January following an upwardly revised 0.6% increase during December. Though the rate of inventory accumulation slowed sharply during the last year, the 3.5% y/y growth contrasts with outright decumulation from 2001 to 2003 and probably suggests only cautious management rather than a pessimistic outlook.
A 1.1% (2.4% y/y) increase in primary metals inventories was accompanied by a 1.1% (2.1% y/y) rise in fabricated metals, but both paled next to a 1.7% (6.9% y/y) gain in electrical equipment and a 1.1% (5.8% y/y) increase in machinery.
Total factory orders dropped 4.5% from December and the advance report of a 10.2% plunge in durable goods orders was mitigated only slightly to -9.9%. The drop reflected a huge 68.3% (+61.4% y/y) decline in nondefense aircraft and a 20.9% (+57.4% y/y) drop in defense aircraft & parts. Factory orders less the transportation sector altogether rose 1.6% (8.3% y/y).
Factory shipments increased 0.3% but less transportation shipments rose 1.4% (7.5% y/y), a gain inflated only slightly by higher petroleum prices.
Unfilled orders fell 0.7% after the 2.6% surge which was powered by higher aircraft orders. Less the transportation sector, backlogs rose 0.4% (10.5% y/y) for the second consecutive month.
| Factory Survey (NAICS) | Jan | Dec | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Inventories | 0.5% | 0.6% | 3.5% | 4.4% | 7.7% | -1.1% |
| New Orders | -4.5% | 1.6% | 6.9% | 8.5% | 9.3% | 3.5% |
| Shipments | 0.3% | 2.4% | 7.2% | 7.4% | 9.5% | 1.5% |
| Unfilled Orders | -0.7% | 2.6% | 16.1% | 16.5% | 8.4% | 8.0% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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