March Factory Orders came out at a stronger than expected 3.0%, on expectations of 2.0%, while the previous number was revised to 0.7% from -0.1%. More importantly Durable Goods were revised from 2.5% to 2.9%, with Durables ex-transportation revised from 1.3% to 1.8%. Yet one wonders how March data is all that critical considering April has already passed and according to diffusion indices the economy is already seeing a modest contraction. At best this number will result in a hike to Q1 GDP from already a painfully low 1.8% as reported last week. Needless to say, the Japanese weakness was not to be expected in March and will only affect the economy in April and onward. Look for car sales data for the first true indication of how the Japan effect is impacting US production.
From the report:
New orders for manufactured goods in March, up five consecutive months, increased $13.5 billion or 3.0 percent to $462.9 billion, the U.S. Census Bureau reported today. This followed a 0.7 percent February increase. Excluding transportation, new orders increased 2.6 percent.
Shipments, up seven consecutive months, increased $12.0 billion or 2.7 percent to $461.4 billion. This followed a 0.6 percent February increase. Unfilled orders, up eleven of the last twelve months, increased $7.0 billion or 0.8 percent to $844.0 billion.
This followed a 0.7 percent February increase. The unfilled orders-to-shipments ratio was 5.54, down from 5.63 in February.
Inventories, up fourteen of the last fifteen months, increased $6.3 billion or 1.1 percent to $572.3 billion.
This followed a 1.0 percent February increase. The inventories-to-shipments ratio was 1.24, down from 1.26 in February.
And some thoughts from Stone McCarthy:
Factory orders gained 3.0% in March after rising 0.7% in February (previously down 0.1%). This was above expectations. The Bloomberg survey median estimate was for up 2.0%.
Forecasts ranged from up 0.8% to up 3.5%. Our forecast was for up 2.3% in March. There was an upward revision in the durables component for March, and nondurables rose more than anticipated.
Durables orders were up 2.9% (first reported +2.5%), and nondurables rose 3.1%.
Overall factory orders rose on a solid increase in transportation (+6.2%). Excluding transportation, orders were up 2.5%, still a decent rise. The 3.1% increase in nondurables was due mainly to gains in petroleum and chemicals.
Overall, factory orders have managed to show improved activity outside of the volatility in transportation.
Inventories rose 1.1% in March, shipments were 2.7% higher, and unfilled orders were up 0.8%. The inventory-to-shipments ratio was down to 1.24 in March from 1.26 in February.