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Economy in Brief

U.S. Factory Sector Orders Decline Led by Transportation
by Tom Moeller  February 4, 2016

New orders in the manufacturing sector fell 2.9% during December following a 0.7% easing in November, revised from -0.2%. The decline roughly matched expectations for a 2.7% drop in the Action Economics Forecast Survey. The shortfall reflected a 5.0% decline (-1.6% y/y) in durable goods orders which was little-revised from the advance report. Leading orders lower was a 29.3% drop (+4.8% y/y) in nondefense aircraft & parts orders. Factory sector orders excluding the transportation altogether eased 0.8% (-5.4% y/y), about the same as during the prior month. Orders for nondurable goods (which equal shipments) fell 0.8% (-7.1% y/y), off for the sixth straight month. A 3.3% decline (-27.6%y/y) in shipments from petroleum refineries dropped for the sixth consecutive month as prices fell. Also down by 0.8% (-3.3% y/y) were food product shipments. Basic chemical shipments remained little-changed (-1.1% y/y). Apparel shipments improved 0.4% but they were down slightly versus last year. Durable goods shipments declined 2.1% (-3.1% y/y), led by a 1.0% increase (-4.1% y/y) in machinery.

Unfilled orders in the manufacturing sector eased 0.5% (-2.0% y/y). Transportation sector backlogs also fell 0.5% (-1.8% y/y) led by a 3.2% decline (-2.0% y/y) in defense aircraft & parts. Outside of the transportation sector, backlogs declined 0.5% (-2.2% y/y). Machinery backlogs declined 2.0% (-8.9% y/y) but computer & electronic product backlogs increased 0.2% (5.7% y/y).

Factory sector inventories increased 0.2% (-1.7% y/y), the first increase in six months. Outside of the transportation sector, inventories were off 0.1% (-2.8% y/y), off for the sixth consecutive month. Primary metals inventories fell 0.6% (-12.0% y/y) but machinery inventories gained 0.7% (-0.9% y/y). Electrical equipment & appliance inventories eased 0.4% (-1.7% y/y) while computer & electronic product inventories notched 0.1% higher (0.2% y/y).

The factory sector figures are available in Haver's USECON database. The expectations figure from the Action Economics Forecast Survey is available in AS1REPNA.

Factory Sector- NAICS Classification (%) Dec Nov Oct Y/Y 2015 2014 2013
New Orders -2.9 -0.7 1.3 -4.3 -6.6 3.5 2.0
Shipments -1.4 -0.1 -0.7 -5.1 -4.3 2.6 1.9
Unfilled Orders -0.5 0.1 0.3 -2.0 -2.0 11.5 6.5
Inventories 0.2 -0.3 -0.2 -1.7 -1.7 2.4 1.7
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