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Economy in Brief

U.S. Factory Orders Stronger than Expected in March
by Sandy Batten  May 4, 2016

New factory orders jumped up 1.1% m/m in March following a slightly revised 1.9% m/m decline in February in a continuation of the recent monthly see-saw pattern. The Action Economics Forecast Survey had anticipated a 0.6% m/m rise for March. Durable goods orders for March (the advance report was released on April 26) were unrevised in today's report, rising 0.8% m/m following a 3.1% m/m decline in February. As in the advance report, durable goods orders in March were propelled by a 2.8% m/m increase in orders for transportation equipment, mostly defense aircraft (+65.3% m/m).

Besides revisions to the durable goods figures, the new information in this report was on nondurable goods. Those orders surged 1.5% m/m in March, their first monthly increase in nine months and their largest monthly rise since July 2013

Shipments of manufactured goods rose 0.5% m/m in March, following eight consecutive monthly declines. The rise in March was due solely to a surge in shipments of nondurable goods, up 1.5%, led by an outsize 8.8% m/m jump in shipments of petroleum products. Shipments of durable goods fell 0.5% m/m in March, their third monthly decline in the past four months.

Unfilled orders slipped 0.1% m/m in March, their third decline in the past four months. The March slip was due entirely to weaker transportation unfilled orders. Excluding those, other unfilled orders were up 0.1% m/m for a third consecutive monthly increase.

Factory inventories posted their first monthly increase in the past nine months, rising 0.2% m/m in March, with both durable and nondurable inventories posting a monthly gain. Given the widespread revival in inventories after months of decline, this may be the first indication that the long-lived inventory correction has run its course. Also, the rise in nondurable inventories runs counter to the BEA's assumption in its first estimate of 1Q GDP, pointing to a small upward revision from this source.

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 (%) Mar Feb Jan Y/Y 2015 2014 2013
New Orders 1.1 -1.9 1.2 -2.8 -6.6 3.5 2.0
Shipments 0.5 -0.8 -0.2 -2.4 -4.3 2.6 1.9
Unfilled Orders -0.1 -0.4 0.1 -1.7 -1.9 11.5 6.5
Inventories 0.2 -0.5 -0.5 -2.3 -1.9 2.4 1.7
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