Factory Orders: Continued Improvement as Orders Beat Estimates
February 3, 2017
Bottom Line: Factory orders rose in December after falling in November. The 12-month annual rate of change is now 3.6% (partially due to base effects but also due to an improving trend). That contracts with contraction of over 4% in both 2015 and 2014. The inventory to shipment ratio fell sharply. Equipment spending added modestly to preliminary 4Q16 GDP -- however, this December data suggests a modest downward revision is likely.
Factory Orders ROSE by 1.3% in December, compared with market expectations for an increase of 0.5%. The prior month's loss was revised higher from -2.4% to -2.3%.
Durable goods orders declined by 0.5%, as previously reported, while nondurable goods orders jumped by 3.1%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders were nearly unchanged.
Factory orders are now 3.6% ABOVE their year ago level but the year-over-year growth rate has rose moderately over the past year (from -4.3% a year ago to the current 3.6%).
The Q4 average for nondefense capital goods shipments is slightly below its Q3 level, compared with a slight increase in equipment spending that was reported in the advance Q4 GDP report.
Article by Contingent Macro Advisors