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 8/2/07 For Jun 2007 | ||||||||||||
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Highlights
Factory orders rose 0.6 percent in June, reversing a 0.5 percent decline in May. The new data are non-durable orders which slipped 0.1 percent reflecting declines in chemical and petroleum products. Inventories rose 0.3 percent in June following 0.4 percent gains in May and April. It's important that gains in orders exceed gains in inventories. Next month's data will be especially important given indications in yesterday's ISM manufacturing report that inventories backed up in July due to a slowdown in orders. Backlog orders showed special strength in June, up 1.4 percent and on top of strong gains in prior months. Shipments declined 0.6 percent but should bounce back up as orders are filled. In sum, the manufacturing sector picked up at the end of the second quarter but conditions at the beginning of this quarter are uncertain.
Factory orders fell 0.5 percent in May, pulled down by a 2.8 percent drop in durables orders (as estimated at that time). Nondurables posted a 1.6 percent gain for the month. More recently, durable goods orders rebounded 1.4 percent in June, following a revised 2.3 percent drop in May. We should see a moderate gain in overall orders for June.
Factory orders Consensus Forecast for June 07: +1.0 percent
Range: +0.5 to +1.8 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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