Haver Analytics
Haver Analytics
USA
| Sep 05 2023

U.S. Factory Orders Drop in July; First M/M Decline Since February

Summary
  • July manufacturers’ new orders (-2.1%) and durable goods orders (-5.2%) both fall m/m after rising for four straight months, while nondurable goods orders (+1.1%) up for the second consecutive month and shipments (+0.5%) up for the third successive month.
  • Unfilled orders grow 0.5%, the fifth straight m/m increase.
  • Inventories rebound 0.1%, the first m/m increase since April.

Total factory orders fell a less-than-expected 2.1% m/m (-0.7% y/y) in July after unrevised rises of 2.3% in June and 0.4% in May, data from the U.S. Census Bureau showed. A 2.5% m/m July drop had been expected in the Action Economics Forecast Survey. The July m/m reading was the first fall since February (-1.7%), driven by a 43.6% m/m plunge in orders for nondefense aircraft & parts. Factory orders excluding defense slid 2.2% (-0.7% y/y) in July, the first m/m slide since April, after a 3.0% increase in June. Factory orders excluding the transportation sector, however, rose 0.8% (-2.5% y/y) following a 0.3% June increase and four consecutive m/m decreases.

Durable goods orders fell 5.2% (+3.7% y/y) in July, reversing a 4.3% increase in June (-5.2% for July unrevised from the advance report on Aug. 24). The July m/m fall was the first since February’s -2.7%. The fall reflected m/m orders drops of 14.3% (+9.3% y/y) in transportation equipment, 1.2% (-3.6% y/y) in furniture & related products, 0.2% (+1.4% y/y) in computers & electronic products, and 0.1% (+0.9% y/y) in primary metals. To the upside, orders for machinery (1.2%; 0.7% y/y), electrical equipment, appliances & components (1.1%; 7.5% y/y), and fabricated metal products (0.7%; -0.2% y/y) posted m/m increases in July.

Nondurable goods orders, which equal nondurable goods shipments, rose 1.1% (-4.5% y/y) in July following a 0.4% June increase and four successive m/m drops. The July rise reflected m/m gains of 4.6% (-19.8% y/y) in petroleum & coal products, 4.0% (3.9% y/y) in apparel, 0.6% (-0.1% y/y) in printing, 0.4% (10.6% y/y) in leather & allied products, 0.4% (-7.4% y/y) in textile mills, 0.2% (-0.3% y/y) in food products, and 0.1% (1.3% y/y) in basic chemicals. To the downside, nondurable goods shipments for textile products (-0.8%; -4.7% y/y) and paper products (-0.7%; +1.3% y/y) registered their m/m declines in July; meanwhile, those for beverage & tobacco products (+0.02%; +11.1% y/y) and plastics & rubber products (-0.04%; -2.1% y/y) were virtually unchanged m/m.

Total shipments grew 0.5% (-0.6% y/y) in July, the third straight m/m gain, on top of a 0.2% increase in June (+0.1% originally). Excluding transportation, shipments advanced 0.7% (-2.3% y/y) following a 0.3% June increase and four successive m/m declines. Shipments of durable goods industries dipped 0.1% (+3.9% y/y) after holding steady in June and rising 2.0% in May. The July easing reflected m/m shipments declines of 1.2% (-0.8% y/y) in furniture & related products, 0.7% (-0.5% y/y) in primary metals, and 0.3% (+10.0% y/y) in transportation equipment. In contrast, shipments for machinery (2.6% y/y), miscellaneous durable goods (1.8% y/y) and computers & electronic products (1.1% y/y) rose 0.3% m/m each in July, while those for electrical equipment, appliances & components (9.2% y/y), fabricated metal products (-0.5% y/y) and wood products (-1.0% y/y) increased 0.2% m/m each.

Unfilled orders rose 0.5% (6.6% y/y) in July, the fifth consecutive m/m rise, on top of a 1.8% increase in June. Excluding transportation, unfilled orders ticked up 0.05% (-0.5% y/y) in July after a 0.1% downtick for three straight months. Backlogs of durable goods also rose 0.5% (6.6% y/y), reflecting rises of 0.8% (11.3% y/y) in transportation equipment, 0.7% (2.6% y/y) in electrical equipment, appliances & components, and 0.7% (-3.2% y/y) in primary metals.

Inventories edged up 0.1% (-0.3% y/y) in July following declines of 0.2% in June and May. Excluding transportation, inventories inched up 0.1% (-0.5% y/y) after drops of 0.2% in June and 0.3% in the prior three months. Durable goods inventories dipped 0.05% (+1.3% y/y) in July, while nondurable goods inventories rebounded 0.3% (-2.6% y/y) following five straight m/m drops.

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

  • Winnie Tapasanun has been working for Haver Analytics since 2013. She has ~20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations.   Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia.   Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.

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