Factory Orders: Solid Gain with Positive Revisions

December 6, 2016
Bottom Line: Factory order growth accelerated in October, growing for the fourth month after nearly two years of year-on-year declines. The 12-month annual rate of change is now firmly back in positive terriroty with upward revisions to September data. The inventory to shipment ratio remained low. Equipment spending was a modest drag on 3rd Quarter GDP -- but this October data suggests it started the 4th Quarter with a postiive impact on GDP. Factory Orders ROSE by 2.7% in October, compared with market expectations for an increase of 2.6%.The prior month's gain was revised higher from 0.3% to 0.6%. Durable goods orders climbed by 4.6%, as previously reported, while nondurable goods orders jumped by 0.9%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders were nearly unchanged. Factory orders are now 1.3% ABOVE their year ago level but the year-over-year growth rate has rose moderately over the past year (from -4.6% a year ago to the current 1.3%). The October level is slightly above its Q3 average, after a slight decline in equipment spending in the Q3 GDP report.