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 8/31/07 For Jul 2007 | ||||||||||||
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Highlights
Factory orders surged in July, up 3.7 percent and led by an 11.0 percent spike in transportation orders that reflects strength in aircraft orders and unusual strength in vehicle orders. But there's plenty of strength outside of aircraft and vehicles, with orders up 2.4 percent excluding transportation. These results are no surprise given strength in last week's durable goods report.
This report includes revised data on durable goods orders, showing a 1 tenth increase to 6.0 percent for July. The report also includes orders for nondurable goods, which rose a sizable 1.3 percent in July and was led by food products.
Other readings include a 2.6 percent jump in overall shipments, strength that may be repeated in the months ahead given the surge in orders. In another good sign, inventory growth at 0.2 percent is well behind shipment growth. The inventory-to-shipment ratio fell to 1.21 from 1.24, a reminder that inventories will have to be built back up to meet demand. Unfilled orders reflect further demand, jumping 2.4 percent following a 1.6 percent jump in June.
Today's report firmly indicates that momentum was building in the nation's manufacturing sector heading into August's troubles in the financial markets. The ISM manufacturing report for August will be released Tuesday morning.
Factory orders rose 0.6 percent in June, reversing a 0.5 percent decline in May. More recently, new durables orders in July rose a sharp 5.9 percent and should boost overall factory orders for the month.
Factory orders Consensus Forecast for July 07: +3.2 percent
Range: +0.5 to +4.2 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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