U.S. Factory Orders Rebounded in March While Shipments Fell Further

Total factory orders rose 0.9% m/m (+1.4% y/y) in March after having fallen a downwardly revised 1.1% m/m in February (initially -0.7%) and 2.1% m/m in January, according to the U.S. Census Bureau. A 1.3% m/m increase had been expected by the Action Economics Forecast Survey. The March rebound was due entirely to a 9.0% m/m surge in orders for transportation equipment (mostly a 78% m/m jump in orders for nondefense aircraft) as orders excluding transportation fell 0.7% m/m (-0.8% y/y) in March, the same monthly decline as in February. Orders excluding transportation have fallen in four of the past five months.

Durable goods orders bounced back in March, rising 3.2% m/m (+4.5% y/y) after a 1.2% monthly decline in February and a 5.0% monthly drop in January. As for total orders, the March rebound in durable goods orders was due mostly to a jump in transportation orders. Excluding those, the remainder of durable goods orders edged up a modest 0.2% m/m in March. In orders other than transportation, orders for computers and electronic products posted a solid 2.1% m/m gain, their third consecutive monthly increase. By contrast, orders for furniture fell 1.3% m/m in March on top of a 1.6% monthly decline in February and machinery orders slipped 0.3% m/m, their fourth monthly decline in the past five months.

Orders for nondurable goods, which equal shipments, remained weak in March, falling 1.4% m/m (-1.6% y/y), their fourth decline in the past five months. This was their first y/y decline since February 2021. The March decline was widely spread across major categories, led by a 7.1% m/m drop in orders for petroleum and coal products and a 2.2% m/m decrease in apparel orders. The only major category to post a monthly gain in March was a 3.2% m/m increase in orders for beverages and tobacco products, their first increase in three months.

Total shipments edged down 0.1% m/m in March following a downwardly revised 0.9% m/m decline in February (previously -0.5% m/m). As for orders, transportations shipments, up 3.7% m/m, provided a meaningful boost. Shipments excluding transportation fell 0.9% m/m in March on top of a 0.8% m/m decline in February. Shipments of durable goods increased 1.1% m/m in March but after excluding transportation, they were down 0.1% m/m. Orders for nonmetallic mineral products fell 1.4% m/m and machinery orders declined 0.9% m/m. On the positive side, orders for electrical equipment increased in March, rising 1.0% m/m. Orders for wood products (+0.2% m/m), primary metals (+0.2% m/m), and fabricated metal products (+0.3% m//m) each posted a small increase.

Unfilled orders bounced back in March, rising 0.4% m/m (5.4% y/y) following an unchanged reading in January and a rare monthly decline in February. The March rebound was once again led by a 0.6% m/m increase in unfilled transportation orders. Unfilled orders ex transportation edged up just 0.1% m/m. Unfilled orders also rose for computers and electronic products (0.4% m/m) and for electrical equipment (0.3% m/m). They fell in March for the other major categories.

Inventories declined 0.8% m/m in March (+2.3% y/y) for their third consecutive monthly decline. Transportation inventories fell 2.7%. Excluding those, the remainder of inventories declined 0.3% m/m in March, their third consecutive monthly fall. Inventories of wood products and primary metals each fell 0.5% m/m. By contrast, inventories of electrical equipment increased 0.4% m/m and furniture inventories rose 0.3% m/m.

The factory sector data are available in Haver’s USECON database. The Action Economics Forecast Survey is in the AS1REPNA database.