Factory Orders Down 3% in December

February 4, 2016 by Paul Ausick

A report out Thursday shows mixed results in factory activity, shipping and new orders in the United States. The U.S. Department of Commerce reported that factory orders slipped by 2.9% ($13.5 billion) in December to $456.5 billion. Bloomberg had its Econoday consensus estimate at a -2.8%. The November drop of 0.7% was unrevised.

Shipments are now down in eight of the past nine months. The December reading fell by some $5.1 billion, or 2.1%, to $236.1 billion. The month of November saw an increase of 0.6%. Shipments of petroleum and coal products, have now fallen for six consecutive months, and led the December decrease, falling by $1.2 billion or 2.8% to $40.6 billion.

Unfilled orders fell following two consecutive monthly increases. That portion of the report dropped $5.8 billion, or 0.5%, to $1.187.4 trillion. This unfilled orders report followed a 0.1% increase in the month of November. The unfilled orders-to-shipments ratio was 7.11, up from 6.94 in November.

Inventories that had been down in five consecutive monthly reports rose in December by $1.9 billion, or 0.5%, to $397.6 billion. Inventories declined by 0.3% in November. The inventories-to-shipments ratio was 1.38, up from 1.35 in November.

What stands out is that new orders for transportation goods fell by 12.6% month over month, and virtually all the drop came in the category of defense and non-defense aircraft and parts where the drops were nearly 69% and 30%, respectively. New orders for transportation equipment totaled $71.16 billion in December, down from $81.79 billion in October and $81.40 billion in November.