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 3/6/07 For Jan 2007 | ||||||||||||
| ||||||||||||
Highlights
Factory orders fell a sharp 5.6 percent in January pressured largely by lower Boeing orders as orders excluding transportation were down a less severe 2.9 percent. Still the report is definitely weak showing a downward revision to durable orders to -8.7 percent from -7.8 percent with non-durable orders, the fresh data in today's report, down 2.0 percent and reflecting price the month's price declines in petroleum and coal.
Unfilled orders edged 0.1 percent higher while shipments fell a sharp 1.2 percent. Fortunately the decline in shipments and orders did not push up inventories which fell 0.2 percent in the month. The decline in inventories was well signaled by the ISM report for that month, which showed one of its sharpest inventory drops on record as supply managers quickly adjusted to lower demand. Still the inventory-to-shipment ratio in today's report did rise 1 tenth to 1.23.
This report was weak right across the board in convincing proof that the long manufacturing expansion is moderating. Last week's ISM's manufacturing report for February showed solid but not dramatic gains through most readings, pointing to steady and non-contractionary movement ahead. Treasuries and the dollar edged lower in initial reaction to today's 10:00 a.m. ET data which also included a dip in the pending home sales index.
Factory orders posted a 2.4 percent gain in December, largely on a spike in aircraft orders. However, the advance report for durables orders in January showed a drop in aircraft orders - which generally are volatile - but also included widespread weakness in other components. Durables orders in the advance report dropped 7.8 percent in January and even with revisions, we can expect durables to pull overall factory orders down sharply.
Factory orders Consensus Forecast for January 07: -4.5 percent
Range: -5.1 to -3.5 percent
![[Chart]](chart.gif)
|
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. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}