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 11/2/07 For Sep 2007 | ||||||||||||
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Highlights
Gains in petroleum and coal made for a big jump in nondurable goods orders that lifted overall September factory orders up 0.2 percent. Orders for durable goods were unrevised from their previously released decline of 1.7 percent. The decline in durables was centered in defense, excluding which orders rose 1.3 percent, and transportation, excluding which orders rose 1.4 percent. An area of special strength on the durables side are capital goods, where shipments excluding defense and aircraft jumped 1.1 percent following a 1.9 percent rise in August.
Gains for the nondurable goods category are likely in October given the jump underway in oil prices. But the outlook on the durables side is uncertain. Yesterday's ISM manufacturing survey was flat at best and the last two industrial production reports showed flat to declining conditions for manufacturing. The question for the factory sector is whether demand for capital goods, boosted by foreign demand, can offset soft demand on the housing-softened consumer side.
Factory orders fell back 3.3 percent in August with weakness in both nondurables and durables. But more recently, durables continued to fall further in September with a 1.7 percent drop, following a revised 5.3 percent decline in August.
Factory orders Consensus Forecast for September 07: -0.5 percent
Range: -1.0 to +1.0 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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