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Economy in Brief

US Factory Orders & Shipments Recover
by Tom Moeller December 2, 2004

Factory orders rose 0.5% last month following an upwardly revised unchanged reading for September. The recovery was due to a 2.4% gain in nondurable orders (which equal shipments) that primarily reflected an 8.3% jump in shipments from petroleum refineries.

Durable goods orders fell 1.1%, revised from the advance report of a 0.4% drop. The advance report of a 3.3% decline in nondefense capital goods orders was revised to show a 3.9% decline and less aircraft, the decline was revised to -4.2% from -3.6%.

Total shipments out of the US manufacturing sector reversed the prior month's decline with a 1.2% surge, but less petroleum & coal shipments recovered just half of the prior months 1.2% drop (+7.7% y/y). Shipments of computers & electronic products rose 2.8% (+9.4% y/y) after the 2.7% September decline but electrical equipment shipments only gained back 0.4% (4.6% y/y) of a 3.0% September skid.

Factory inventory accumulation picked up to 0.5% following a downwardly revised 0.1% September up tick, however the inventory to sales ratio in the factory sector scaled back to 1.24 due to the surge in shipments. Inventories of consumer durables fell 0.1% (+9.7% y/y) after two months of strong accumulation.

Unfilled orders rose 0.5% and the ratio of unfilled orders to shipments for durables added to the sharp gain in September. Supply bottlenecks also are indicated by the ISM's index of vendor delivery speed.

Factory Survey (NAICS) Oct Sept Y/Y 2003 2002 2001
Inventories 0.5% 0.1% 5.9% -1.3% -1.8% -6.1%
New Orders 0.5% 0.0% 8.7% 3.7% -1.9% -6.7%
Shipments 1.2% -1.1% 10.6% 2.6% -2.0% -5.4%
Unfilled Orders 0.5% 0.9% 8.5% 4.2% -6.1% -5.9%
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