Factory Orders: Modest Decline, Trend Still Improving

Bottom Line:3 Factory orders fell less than expected in October and are now up 3.7% from a year ago. Positive revisions, including those to the durable goods orders, suggest the last 3-months saw an acceleration in orders relative to trend. Despite a modest decline to start the quarter, the trend suggests the manufacturing sector should continue to add to GDP in the 4th Quarter. Factory Orders FELL by 0.1% in October, compared with market expectations for a decline of 0.4%. The prior month's gain was revised higher from 1.4% to 1.7%. Durable goods orders declined by 0.8%, revised from a decline of 1.2%, while nondurable goods orders rose by 0.7%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders were nearly unchanged. Factory orders are now 3.7% ABOVE their year ago level but the year-over-year growth rate has risen modestly over the past year (from 1.9% a year ago to the current 3.7%). The October level is slightly above its Q3 average, after a modest increase in equipment spending in the Q3 GDP report.