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Economy in Brief

U.S. Factory Orders Strength Led by Nondurables
by Tom Moeller  February 6, 2017

Manufacturing sector orders increased 1.3% during December (2.0% y/y) following a 2.3% November decline. Durable goods orders eased 0.5% (-0.7% y/y). Transportation sector orders fell 2.5% (-5.7% y/y) with a 64.0% plunge in defense aircraft & parts orders. Orders excluding defense rose 2.4% (1.9% y/y) following a 3.2% drop. Orders outside of the transportation sector increased 2.1% (3.8% y/y) as bookings for computers & electronic products jumped 2.6% (4.7% y/y). Machinery orders improved 0.7% (5.3% y/y), but electrical equipment orders eased 0.6% (5.3% y/y) following strong gains in the prior two months. Nondurable goods orders (which equal shipments) jumped 3.1% (3.5% y/y).

The rise in nondurable goods shipments reflected a 15.3% surge (21.6% y/y) in petroleum refinery shipments. Basic chemical shipments gained 1.1% (2.3% y/y), and textile mill shipments rose 2.7% (6.6% y/y) after two months of strong gains. Food product shipments also were strong and posted a 1.1% rise (3.3% y/y). Paper product shipments gained 0.7% (1.1% y/y). Durable goods shipments improved 1.4% (3.1% y/y). Transportation equipment shipments jumped 2.4% (4.5% y/y) led by strength in the aircraft sector. Machinery shipments increased 1.6% (-2.2% y/y), and computer & electronic product shipments rose 0.8% (6.4% y/y).

Unfilled orders declined 0.6% (-1.7% y/y) continuing the weak trend of the last year. Transportation sector backlogs fell 1.1% (-3.1% y/y). Outside of the transportation sector, unfilled orders improved 0.4% (2.3% y/y). Electrical equipment & appliance backlogs increased 1.3% (10.4% y/y) after a 2.3% surge. Unfilled orders for computers & electronic products gained 0.7% (4.6% y/y), but machinery order backlogs ticked just 0.1% higher (-4.0% y/y).

Inventories in the factory sector edged just 0.1% higher in December (0.2% y/y) after a 0.5% gain. Outside of the transportation sector, inventories rose 0.2% (0.2% y/y). Durable goods inventories eased 0.1% (-1.1% y/y), but fabricated metals inventories fell 0.3% (-1.3% y/y), down for the fourth month in the last five. Machinery inventories increased 0.5% (-1.7% y/y), but inventories of computers & electronic products fell 0.3% (-0.2% y/y). Electrical equipment inventories remained unchanged (-1.5% y/y).

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

Factory Sector- NAICS Classification (%) Dec Nov Oct Dec Y/Y 2016 2015 2014
New Orders 1.3 -2.3 2.8 2.0 -1.4 -6.3 1.8
Shipments 2.2 0.3 0.2 3.5 -1.5 -4.4 1.2
Unfilled Orders -0.6 -0.2 0.8 -1.7 -1.7 -2.4 8.8
Inventories 0.1 0.5 0.1 0.2 0.2 -2.5 1.8
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