U.S. Factory Orders Rebound; Shipments Improve

Business activity in the factory sector is humming. Manufacturers' orders increased 0.4% during May (9.2% y/y) following a 0.4% April decline, revised from -0.8%. Manufacturing shipments rose 0.6% (7.3% y/y) after a 0.1% April gain.

Durable goods orders eased 0.4% during May (+9.4% y/y), revised from -0.6% in last month's advance report. The decline followed a 1.0% April fall. Orders for transportation equipment were off 1.1% in May (+12.1% y/y) due to a 7.0% decline in civilian aircraft bookings. Total factory orders excluding transportation improved 0.7% (8.6% y/y). Machinery orders increased 1.2% (4.2% y/y) following a 1.7% rise, earlier reported as 0.7% decline. Orders for computers & electronic products eased 0.2% (+8.2% y/y) following two months of sharp increase.

Shipments of durable goods were unchanged (5.7% y/y) in May after easing slightly in April. Shipments of transportation products fell 0.6% (+2.2% y/y) reflecting a 6.1% decline (-12.9% y/y) in automobile shipments. Light truck shipments also were off by 9.6% (+6.0% y/y). Shipments of civilian aircraft rebounded 22.5% (1.6% y/y) after a 27.1% decline. Machinery shipments improved 0.7% (5.5% y/y) after a 0.7% gain. Computer & electronic product shipments rose 0.4% (7.1% y/y). Electrical equipment shipments increased 0.4% (6.1% y/y).

Nondurable goods shipments, which equal orders because nondurables are shipped when ordered, gained 1.1% (8.9% y/y) after a 0.3% rise. Petroleum shipments increased 3.7% (37.5% y/y) with higher prices. Food products held fairly steady (1.8% y/y). Basic chemical shipments increased 0.9% (5.7% y/y) and paper product shipments gained 0.6% (5.9% y/y). Textile product shipments fell 0.3% (+6.4% y/y).

Unfilled orders of durable goods rose 0.5% (4.6% y/y), the fourth consecutive monthly rise. Transportation equipment backlogs gained 0.5% (4.2% y/y). Excluding the transportation sector, unfilled orders rose 0.6% (5.4% y/y) following a 0.7% increase. Machinery backlogs improved 0.4% (3.7% y/y), about as the did after an upwardly revised 0.3% April rise. Unfilled orders of computer & electronic products increased 0.3% (2.8% y/y) and electrical equipment & appliance backlogs rose 0.2% (-0.6% y/y), the fourth straight month of moderate increase.

Inventories of manufactured products gained 0.2% (5.2% y/y) and have been rising since late-2016. Durable goods inventories increased 0.3% (5.1% y/y). Transportation product inventories gained 0.4% (3.7% y/y). Outside of the transportation sector, inventories inched 0.1% higher (5.6% y/y), the weakest result in a year. Machinery sector inventories were fairly steady (5.2% y/y). Computer & electronic product inventories eased 0.1% (+3.4% y/y). Nondurable goods inventories were stable (5.3% y/y). Basic chemical inventories rose 0.1% (2.9% y/y) and food product inventories eased 0.5% (+0.5% y/y). Petroleum refinery inventories rose 0.3% (27.4% y/y).

All these factory sector figures are available in Haver's USECON database.