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Economy in Brief

U.S. Factory Orders Decline Further in June, but Shipments Rise
by Tom Moeller  August 4, 2016

New orders to manufacturers declined 1.5% (-5.6 y/y) during June following a little-revised 1.2% May fall. A 1.7% decline had been expected in the Action Economics Forecast Survey. Durable goods orders fell 3.9%, the same as in the advance report, paced by a sharp drop in transportation sector bookings. Nondefense aircraft & parts orders fell 58.8% (-60.7% y/y). Factory sector orders outside of the transportation sector altogether improved 0.4% (-4.2% y/y) after a 0.2% gain.

Total shipments rose 0.7% (-3.2% y/y) after a 0.1% rise. Nondurable goods shipments, which equal orders, improved 1.0% (-4.6% y/y), led by a steady 3.9% increase (-23.7% y/y) in petroleum refinery shipments. Basic chemical shipments improved 0.5% (0.6% y/y) and textile mill shipments rose 0.2% (4.7 y/y). Apparel shipments declined 1.7% (+8.5% y/y). In the durable goods sector, shipments improved 0.4% (-1.9% y/y), led higher by a 1.4% gain (0.8% y/y) in transportation shipments. Machinery shipments eased, however, by 0.2% (-8.3% y/y).

Unfilled orders declined 0.8% (-1.9% y/y) as durable goods backlogs also fell 0.8% (-1.9% y/y). The decline was led by a 7.6% decrease (-7.7% y/y) in machinery backlogs, while unfilled orders in the transportation sector fell 1.2% (-2.7% y/y). Unfilled orders for computers & electronic products notched 0.1% higher (5.7% y/y).

Inventories of manufactured products eased 0.1% (-3.7% y/y), and have been declining steadily since late in 2014. Transportation equipment inventories fell 1.0% (-2.7% y/y). Outside of the transportation sector, inventories gained 0.2% (-4.0% y/y). Electrical equipment inventories declined 0.8% (-3.9% y/y), but machinery inventories rose 0.8% (-3.5% y/y). Inventories of nondurable goods improved 0.2% (-3.8% y/y), but there was a one-third y/y drop in the value of petroleum refinery inventories. Food product inventories gained 0.4% (2.1% y/y), and basic chemical inventories rose 0.4% (1.3% 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 (%) Jun May Apr Jun Y/Y 2015 2014 2013
New Orders -1.5 -1.2 1.8 -5.6 -6.3 1.8 2.0
Shipments 0.7 0.1 0.4 -3.2 -4.4 1.2 2.0
Unfilled Orders -0.8 0.0 0.6 -1.9 -2.4 8.8 5.8t
Inventories -0.1 -0.1 -0.1 -3.7 -2.5 1.8 0.9
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