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Economy in Brief

U.S. Factory Orders Slip M/M But Trend Gain Stable
by Tom Moeller  March 31, 2011

Improvement in factory sector activity slowed last month. Factory orders ticked down 0.1% during February after an unrevised 3.3% January gain. For durable goods only, orders fell 0.6%, revised from the 0.9% decline reported last week. Consensus expectations were for a 0.5% increase in total factory orders. Despite the monthly slip in orders, y/y growth held steady at 9.3%. The orders' decline was accompanied by a 0.3% increase in shipments. This gain follows increases well over 1.0% in each of the prior three months.

A slower rate of inventory building, 0.8% last month, seems to account for the reduced rate of factory sector improvement. Moreover, this squares with the slowing gains in industrial production reported earlier this month. Nevertheless, unfilled orders moved 0.5% higher in February. The 4.5% y/y gain masks, however, the strength of a 13.0% rise in backlogs less the transportation sector. It was led by a 29.3% y/y gain in backlogs of machinery orders.

The factory orders figures are available in Haver's USECON database.

Factory Sector - NAICS Classification (%) Feb Jan Dec Y/Y 2010 2009 2008
Orders  -0.1  3.3 1.4 9.3 12.1 -17.8 -1.0
Shipments  0.3 1.7 2.7 9.6 9.1 -15.6 2.3
Inventories 0.8 1.5 1.4 9.4 8.3 -8.8 -0.8
Backlogs 0.5 0.8 -0.2 4.4 4.0 -11.1 2.8
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