Factory orders are very strong led by a surge in January and including a large upward revision to December. New orders jumped 3.1 percent in January on top of a strong December base where orders were revised to plus 1.4 percent from plus 0.2 percent. The January gain is centered in aircraft -- a key component of the manufacturing sector -- and includes gains for primary metals, fabricated metals, mining equipment as well as a 3.1 percent gain for non-durable goods. Note that gains for non-durables, specifically petroleum and coal, along with gains for metals reflect price effects.
Price effects for non-durables are giving a big boost to dollar totals for shipments which rose 1.8 percent following gains of 2.7 percent in December and 1.6 percent in November. Excluding non-durables, shipment gains are solid but less spectacular at 0.3 percent, 2.3 percent, and 0.5 percent over the three months.
Unfilled orders, high levels of which are a big plus for employment, rose 0.6 percent in January to more than reverse a year-end December drawdown of 0.2 percent. Inventories are definitely building, up 1.3 percent following similar gains the prior two months.
This morning's fourth straight gain for manufacturing payrolls, and two straight months of very robust gains, confirm that manufacturing, benefiting from strong demand for U.S. exports especially capital goods exports, is arguably the economy's leading strength. Tuesday's very robust ISM purchasing report on manufacturing promises solid gains for the next factory orders report.
Market Consensus before announcement
Factory orders rose 0.2 percent in December as price-related gains in non-durable goods offset a monthly aircraft-related downswing for durable goods. More recently, durables orders in January rebounded 2.7 percent, following a revised 0.4 percent dip in December