WASHINGTON – The value of new factory orders fell 0.8% in April, below the 0.5% decline expected by analysts in an MNI survey, data released by the Commerce Department Monday morning showed.
The weaker-than-expected decline in factory orders was due to a soft 0.1% gain in nondurable goods orders despite a 0.6% gain in petroleum and coal products. Nondurable goods new orders are equivalent to nondurable goods shipments in this report.
Durable goods orders were revised up slightly to a 1.6% decline from the 1.7% drop reported in the advance estimate.
Factory orders excluding transportation were up 0.4% in the month following a 0.5% gain in March, continuing the string of gains that stretches back virtually uninterrupted for most of the past two years.
In addition, unfilled orders were up 0.5% in April, showing some pent-up demand for products that will need to be worked down in the coming months.
Transportation orders fell 6.0% in April, a small upward revision from the 6.1% decline in the advance estimate, but still driven by nondefense aircraft, which were down 28.9%. At the same time, defense aircraft orders were up 7.6% and motor vehicle orders were up 1.0%. The unlisted transportation components were up 1.9% in the month, based on an MNI calculation.
Nondefense capital goods new orders fell by 6.8%, however it was up 1.0% when excluding aircraft. Civilian aircraft capital goods were down 36.2% following a 71.1% increase in March.
Factory inventories rose by 0.3% in April. In addition to this, the Commerce Department's advance report on inventories showed a 0.6% increase for retail inventories and a flat reading for wholesale inventories.
While these data are eligible for revision, the levels as they stand now, combined with the 0.3% gain in factory inventories, would result in a 0.3% gain in April business inventories when that report is released on June 14, an MNI calculation showed. The revised wholesale data for April will be released on June 8 and could alter this projection.
Overall factory shipments were flat in the month on a flat reading for durable goods shipments and the 0.1% rise in nondurable shipments. Nondefense capital goods shipments posted a decline of 4.6%, but were up 0.9% after excluding the civilian aircraft component.
Given the mix of inventories and shipments reported Monday, the inventory-to-shipments ratio held steady at 1.35 in April.
