Factory Orders: New Orders Increase Modestly

June 3, 2016
Bottom Line: Factory orders increased moderately in April for the 2nd consecutive month, largely due to a climb in aircraft orders within durable goods orders, as previously reported. However, the growth rate has been declining over the past 17 months and is now -1.8% year-over-year. Factory Orders ROSE by 1.9% in April, in line with market expectations. The prior month's gain was revised higher from 1.1% to 1.7%. Durable goods orders climbed by 3.4%, as previously reported, while nondurable goods orders rose by 0.4%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders ROSE by 0.4%. Factory orders are still 1.8% BELOW their year ago level and the year-over-year decline has slowed over the past year (from -5.9% a year ago to the current -1.8%). Nondefense Capital Goods Shipments and Nondefense Capital Goods Shipments excluding aircraft, proxies for capital spending, ROSE, by 0.6% and by 0.4%, respectively. The April level is slightly below its Q1 average, after a moderate decline in equipment and software spending in the Q1 GDP report. Factory Inventories FELL by 0.1% and the Inventory-to-Shipment Ratio FELL to 1.36 from 1.37, still sharply above its post-recession cyclical nadir of 1.26 reached in July 2011.
Article by contingentmacro