Factory orders represent the dollar level of new orders for both durable and nondurable goods. This report gives more complete information than the advance durable goods report which is released one or two weeks earlier in the month. Why Investors Care
| Released on 2/2/07 For Dec 2006 | ||||||||||||
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Highlights
Factory orders rose 2.4 percent in December reflecting a month-to-month jump in aircraft orders. Non-durables are the new data in the month, up 1.8 percent on a sharp gain in petroleum and coal products. Durables orders, first reported in last week's durables goods report, rose 2.9 percent, 2 tenths lower than the initial estimate.
Inventories are particularly worth note given yesterday's dramatic fall in the related ISM index for January that indicates supply managers, concerned over declines in unfilled orders, are reducing stocks. But unfilled orders in this report are not confirming weakness and instead show a strong 2.1 percent rise in December on top of a 1.8 percent gain in November.
The nation's factory sector had been showing signs of strength, most notably last week's durable goods report. But regional surveys have been soft, including Empire State and Chicago, and yesterday's ISM report (the inventory jolt aside) points to no better than flat conditions ahead. Today's payroll report showed, unfortunately but not surprisingly, further contraction. Watch for the Empire State and Philadelphia reports at mid-month for fresh data on the manufacturing sector and whether new gains in durable goods orders can be expected.
Factory orders rebounded 0.9 percent in November, led by a surge in durables. However, last week's advance report on durables showed a 3.1 percent in December and should boost overall factory orders for the month. With the firming in oil prices during December, the nondurables component will also likely be positive.
Factory orders Consensus Forecast for December 06: +1.9 percent
Range: +1.0 to +3.5 percent
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Even though monthly shipment data fluctuate less than new orders, both series show underlying trends more clearly by looking at year-over-year changes. In 2005, new orders rose more rapidly than shipments due to large gains in aircraft orders. Aircraft orders have a long lead to shipment. |
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