U.S. Factory Orders Met Expectations Of 0.7% Increase In June

by Ike Obudulu Posted on August 2nd, 2018

Washington, D.C., USA: New orders for manufactured goods in June, up four of the last five months, increased $3.3 billion or 0.7 percent to $501.7 billion, the U.S. Census Bureau reported today. Economists also expected an 0.7% increase in June.

This followed a 0.4 percent May increase. Shipments, up thirteen of the last fourteen months, increased $4.9 billion or 1.0 percent to $501.4 billion. This followed a 0.6 percent May increase. Unfilled orders, up seven of the last eight months, increased $4.4 billion or 0.4 percent to $1,165.2 billion. This followed a 0.5 percent May increase. The unfilled orders-toshipments ratio was 6.64, down from 6.67 in May. Inventories, up twenty consecutive months, increased $0.7 billion or 0.1 percent to $669.3 billion. This followed a 0.2 percent May increase. The inventories-toshipments ratio was 1.33, down from 1.35 in May.

New orders for manufactured durable goods

New orders for manufactured durable goods in June, up following two consecutive monthly decreases, increased $2.1 billion or 0.8 percent to $251.5 billion, down from the previously published 1.0 percent increase. This followed a 0.3 percent May decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $1.8 billion or 2.1 percent to $87.7 billion. New orders for manufactured nondurable goods increased $1.2 billion or 0.5 percent to $250.2 billion.

Shipments of manufactured durable goods

Shipments of manufactured durable goods in June, up ten of the last eleven months, increased $3.7 billion or 1.5 percent to $251.1 billion, down from the previously published 1.7 percent increase. This followed a 0.2 percent May increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $3.1 billion or 3.7 percent to $85.3 billion. Shipments of manufactured nondurable goods, up twelve of the last thirteen months, increased $1.2 billion or 0.5 percent to $250.2 billion. This followed a 1.1 percent May increase. Chemical products, up three of the last four months, led the increase, $0.5 billion or 0.8 percent to $65.4 billion.

Unfilled orders for manufactured durable goods

Unfilled orders for manufactured durable goods in June, up seven of the last eight months, increased $4.4 billion or 0.4 percent to $1,165.2 billion, unchanged from the previously published increase. This followed a 0.5 percent May increase. Transportation equipment, also up seven of the last eight months, led the increase, $2.4 billion or 0.3 percent to $802.3 billion.

Inventories of manufactured durable goods

Inventories of manufactured durable goods in June, down following seventeen consecutive monthly increases, decreased $0.5 billion or 0.1 percent to $402.9 billion, unchanged from the previously published decrease. This followed a 0.3 percent May increase. Transportation equipment, down following two consecutive monthly increases, drove the decrease, $1.9 billion or 1.4 percent to $126.9 billion. Inventories of manufactured nondurable goods, up twelve consecutive months, increased $1.1 billion or 0.4 percent to $266.3 billion. This followed a virtually unchanged May increase. Chemical products, up eight of the last nine months, led the increase, $0.7 billion or 0.8 percent to $88.7 billion. By stage of fabrication, June materials and supplies increased 1.0 percent in durable goods and increased 0.1 percent in nondurable goods. Work in process decreased 1.4 percent in durable goods and increased 0.8 percent in nondurable goods. Finished goods increased 0.2 percent in durable goods and increased 0.5 percent in nondurable goods.

The Factory Orders Report

The Factory Orders Report is compiled from results of the U.S. Census Bureau’s Manufacturers’ Shipments, Inventories, and Orders (M3) survey, which is a voluntary survey authorized by Title 13 of the United States Code.

This survey provides statistics on a calendar-month basis for manufacturers’ value of shipments, new orders (net of cancellations), end-of-month order backlog (unfilled orders), end-of-month total inventory (at current cost or market value), and inventories by stage of fabrication (materials and supplies, work-in-process, and finished goods).

Data published from the M3 survey are based on a panel of approximately 5,000 reporting units that represent approximately 3,100 companies and provide an indication of month-to-month change for the Manufacturing Sector.

Why Markets Care About Factory Orders Report

The Factory Orders monthly Report measures change in the total value of new purchase orders placed with manufacturers.

Factory orders are released monthly in a report by the the Census Bureau of the U.S. Department of Commerce. The full name of the report is “Full Report on Manufacturers’ Shipments, Inventories and Order” but is more commonly known as Factory Orders.

The report contains a revision of the Durable Goods Orders data released about a week earlier, and fresh data regarding non-durable goods

Because the performance of investment markets is heavily influenced by the overall economy, investors recognize the importance of monitoring indicators such as factory orders to gain insight into growth trends. As with other indicators that monitor manufacturing and production, equity markets will be positively affected when the factory orders report shows an increase in production.

It is a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders

Factory orders are economic indicators, meaning they signify an overall direction of the market and economy. When factory orders increase, it usually means the economy is expanding as consumers demand more goods and services, which in turn requires retailers and suppliers to order more supplies from factories. An increase in factory orders doesn’t always mean good news, however, as such a change can also be a sign of inflation. Alternatively, when factory orders decrease, it typically means the economy is contracting, meaning consumers are showing less demand for goods and services, and thus fewer supplies need to be ordered.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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