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 2/4/08 For Dec 2007 | ||||||||||||
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Highlights
Factory orders jumped 2.3 percent in December, reflecting a 5.0 percent surge for durable goods, revised 2 tenths lower from last week's data, but pushed down by a 0.4 percent decline in nondurable orders, the new data in today's report that reflects a month-to-month price swing for energy products. Order data, which also include a 2.5 percent jump in total unfilled orders, were very strong for the manufacturing sector in both December and November, a surprise given weak ISM and Philadelphia Fed manufacturing reports and wide ongoing declines in manufacturing payrolls.
The strength in orders point to rising production during the first quarter, though shipments in December slipped 0.3 percent following a 1.3 percent rise in November and a 1.2 percent gain in October. Strength in orders and the prospect of increased production should limit concern over inventories, which rose 0.8 percent in December and 0.7 percent the prior month. Capital goods orders were very strong in December, underpinned by global infrastructure demand and the very soft dollar.
New orders data in last week's ISM report showed slight month-to-month contraction for January, but ISM's new order data in December were even weaker -- again a result not confirmed by Commerce Department data. The manufacturing sector appears to be stable, a key plus for the economy that cuts the risk of recession.
Factory orders jumped 1.5 percent in November but the gain reflected a 3.0 percent spike in orders for nondurable goods, a category bloated by price related gains for energy products. But more recently, durables orders have been robust with widespread strength. Durable goods orders surged 5.2 percent in December, following a 0.5 percent rise in November. While December's jump in orders was led by aircraft, strength was notable in many components. Even excluding the transportation component, new orders advanced a robust 2.6 percent in December, following a 0.4 percent fall in November.
Factory orders Consensus Forecast for December 07: +2.3 percent
Range: +0.6 to +3.5 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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