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Factory Orders: Strong Revisions, Trend Still Concerning

June 5, 2017
Bottom Line: Factory orders fell as expected in April but were revised sharply higher for March, confirming upward revisions to business investment figures previously reported in the 2nd revision of 1st Quarter GDP. After a sharp rebound from energy-related weakness in 2015, core durable and nondurable goods are seeing modestly slower order growth overall. Excluding transportation, durable goods orders are higher by just 2.2% annualized over the last 3 months, slower than the 6% pace seen over the last 12 months. Nondurable goods order growth is also well below the 12-month average.

Factory Orders FELL by 0.2% in April, in-line with market expectations. The prior month's gain was revised higher from 0.2% to 1.0%.

Durable goods orders declined by 0.8%, as previously reported, while nondurable goods orders jumped by 0.4%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders were nearly unchanged. Factory orders are now 3.8% ABOVE their year ago level but the year-over-year growth rate has rose moderately over the past year (from -2.2% a year ago to the current 3.8%).

The April level is slightly above its Q1 average, after a modest increase in equipment spending in the Q1 GDP report.