Factory Orders: New Orders Increase Modestly

Bottom Line: Factory orders increased modestly in March largely due to a climb in defense aircraft orders within durable goods orders, as previously reported. However, the growth rate has been declining over the past 16 months and is now -4.2% year-over-year. Factory Orders ROSE by 1.1% in March, compared with market expectations for an increase of 0.6%. The prior month's loss was revised lower from -1.7% to -1.9%. Durable goods orders climbed by 0.8%, as previously reported, while nondurable goods orders jumped by 1.5%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders FELL by 0.3%. Factory orders are now 4.2% BELOW their year ago level and the year-over-year growth rate has been negative over the past year (from -5.2% a year ago to the current -4.2%). Nondefense Capital Goods Shipments and Nondefense Capital Goods Shipments excluding aircraft, proxies for capital spending, ROSE, by 0.6% and by 0.5%, respectively. The Q1 average was weaker than its Q4 level, consistent with a decline in equipment and software spending that was reported in the advance Q1 GDP report. Factory Inventories ROSE by 0.2% and the Inventory-to-Shipment Ratio STAYED at 1.37, sharply above its post-recession cyclical nadir of 1.26 reached in July 2011.