Factory Orders Steady, Shipments Fall In August
October 04, 2001
Orders for goods from U.S. factories are holding steady, with the news taking analysts by surprise while shipments continued their decline.
Thursday the Commerce Department reported order levels were unchanged in August, following a revised 0.1% decline the month before, while shipments softened for a third consecutive month, down 1.2% percent in August following declines in July and June.
The better than anticipated orders news came as a surprise to analysts polled by Reuters, who were forecasting a drop of 0.4%. Orders are a indicator as to the possible level of future truck shipments.
Orders for machinery increased 2.3%, new computer and electronic orders posted a gain of 1.7%, while transportation equipment orders fell by 1.4%.
On the shipments side, things did not look as good. Electronics and computers remains the weakest sector with a further 5.3% drop in August. Transportation equipment shipments fell 0.8% in August.
Newport Communications Senior Economist Jim Haughey says the economy entered September still treading water, just barely above the recession zone.
“This is the interpretation of steady orders for long lead durable goods and steady shipments for short lead packaged goods,” he said.
“The 0.7% drop in inventory means that production is still below final consumption. The inventory/sales ratio suggests that at least one to two more months are needed to absorb the balance of the excess inventories, excepting electronics.”
In the non-durable goods sector, most categories posted shipments gains in August. Food was up 0.6%, paper up 0.1% and apparel 0.8%. The oil based petroleum, chemical and plastics sectors all had reduced shipments and are likely to remain weak for several more months due to depressed industrial demand.