| Factory Orders |
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Released On 8/2/2012 10:00:00 AM For Jun, 2012
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Factory Orders - M/M change | 0.7 % | 0.5 % | 0.7 % | -0.5 % to 1.1 % | -0.5 % |
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Highlights
Order declines for petroleum & coal sent non-durable goods down 2.0 percent in June and pulled down overall factory goods orders to a very disappointing 0.5 decline. Orders for petroleum & coal fell 2.9 percent for their largest drop in nearly 3-1/2 years. Moderating prices are a factor in the drop as is lower demand for basic materials and for inputs at utilities where output has been on the decline.
The news on the durable side is no better than mixed despite a 1.3 percent gain for the category (revised 3 tenths lower from last week's advanced reading). The gain is lopsided, centered in aircraft where any one month's orders can swing violently. Outside of aircraft, most of the components have negative signs in front of them.
The weakness is making for an unwanted build in inventories where the inventory-to-shipment ratio jumped 2 tenths to 1.29. Shipments fell 1.1 percent and the spottiness in orders doesn't point to strength ahead. One positive is a moderate build in unfilled orders, which will give manufacturers something to work down as they wait for new orders to pick back up.
The last two ISM reports on manufacturing, the most recent released yesterday, are decidedly negative and point to another disappointing factory orders report this time next month. This report very rarely moves the markets because of the advanced report on durable orders which usually tells the whole story, but not this time. The Dow is moving off lows but further improvement may be limited following today's news.
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Market Consensus before announcement
Factory orders rebounded 0.7 percent in May, reversing April's revised 0.7 percent decline but still well short of reversing March's 2.1 percent plunge. Orders for durable goods rose 1.3 percent, which was upwardly revised from the prior released advance 1.1 percent gain, while orders for non-durable goods rose 0.2 percent. More recently, new factory orders for durables jumped 1.6 percent in June after rebounding 1.6 percent in May.
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Definition
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
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![[Chart]](showimage.asp?imageid=22967)
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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 for example,new orders rose more rapidly than shipments due to large gains in aircraft orders. Aircraft orders have a long lead to shipment.
Data Source: Haver Analytics
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