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 7/3/07 For May 2007 | ||||||||||||
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Highlights
Factory orders fell 0.5 percent in May offering a new reminder that data on the manufacturing is mixed. The new data in today's report is a 4 tenth downward revision to durable goods orders, now at a month-to-month decline of 2.8 percent, and a 1.6 percent rise in nondurable goods orders that largely reflects price changes in oil and coal.
Yesterday's ISM manufacturing showed wide strength in line with prior reports from the Philadelphia and New York Federal Reserves. But factory order data, along with the Federal Reserve's industrial production report, are telling a different story. Nevertheless, the manufacturing sector is likely gradually moving up from flat conditions early in the year. This change is likely to be first picked up by diffusion surveys such as the ISM where the methodology magnifies month-to-month change.
Factory orders were moderate in April, rising 0.3 percent. More recently, however, in the advance report, new factory orders for durables fell 2.8 percent in May with weakness broad based. We are likely to see strength in nondurables even though much of it is likely a price effect from higher oil prices.
Factory orders Consensus Forecast for May 07: -1.2 percent
Range: -1.5 to -0.6 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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