Factory Orders: New Orders Decline Modestly

Bottom Line: Factory orders decreased moderately in December for the 2nd consecutive month (largely due to a decline in aircraft orders within durable goods orders, as previously reported). The growth rate has been declining over the past 14 months and is now -3.9% year-over-year. Factory Orders FELL by 2.9% in December, compared with market expectations for a decline of 2.8%. The prior month's loss was revised lower from -0.2% to -0.7%. Durable goods orders declined by 5.0%, as previously reported, while nondurable goods orders fell by 0.8%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders FELL by 0.7%. Factory orders are now 3.9% BELOW their year ago level and the year-over-year growth rate is little changed over the past year (from -4.0% a year ago to the current -3.9%). Nondefense Capital Goods Shipments and Nondefense Capital Goods Shipments excluding aircraft, proxies for capital spending, FELL by 6.3% and ROSE by 0.2%, respectively. The Q4 average was weaker than its Q3 level, consistent with the decline in equipment and software spending that was reported in the advance Q4 GDP report. Factory Inventories ROSE by 0.2% and the Inventory-to-Shipment Ratio ROSE to 1.38 from 1.35, sharply above its post-recession cyclical nadir of 1.26 reached in July 2011.