December Factory Orders Decline 2.9%

Written by Sandy Williams

Factory orders continued to slide downwards in December, decreasing $13.5 billion or 2.9 percent to $456.5 billion according to data released by the U.S. Census Bureau. Orders have been down four of the last five months and follow a decrease of 0.7 percent in November. Orders for transportation equipment, in particular commercial aircraft, led the decline, down 12.6 percent in December. Manufactured nondurable goods fell 0.8 percent in December.

December’s fall was the biggest decline since December 2014. U.S. manufacturers continue to face headwinds from strong dollar, weak export demand, and inventory overhang.

Weaker demand for transportation equipment was also reflected in a 1.4 percent decrease in shipments. At $467 billion in December, shipments have been down eight of the last nine months. Manufactured nondurable goods shipment fell 0.8 percent led by a 2.8 percent decrease in shipments of petroleum and coal products.

Unfilled orders dropped 0.5 percent following a 0.1 percent increase in November. The unfilled orders-to-shipments ratio was 7.11, up from 6.94 in November.

Inventories increased 0.5 percent in December following five months of decreases. Again, transportation equipment led the change for the month, up 1.3 percent to $131.7 billion. Inventories of nondurable goods fell $1.0 billion or 0.4 percent and included a 2.6 percent decrease in petroleum and coal products. The inventory-to-shipment ratio rose to 1.38 from 1.35 in November indicating inventories continue to be too high.

About the report: The Manufacturers’ Shipments, Inventories and Orders survey provides statistics on a calendar-month basis for manufacturers’ value of shipments, new orders (net of cancellations), end-of-month order backlog (unfilled orders), end-of-month total inventory (at current cost or market value), and inventories by stage of fabrication (materials and supplies, work-in-process, and finished goods).  Survey data is based on a panel of approximately 4,800 reporting units that represent approximately 3,000 companies and provide an indication of month-to-month change for the Manufacturing Sector.

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