Factory Orders Growth Slows

April factory orders rose +.3% MoM (consensus +.7%). March was revised higher to +4.1% from +3.5%. Reduced orders for transportation equipment and machinery were responsible for a substantial part of the decline. Civilian aircraft orders fell 10.7% MoM in April after rising 54% in March. Auto demand declined -2.7% MoM, versus an increase of +2.4% in March. Orders for new machinery fell -1.5% MoM after rising +5.4% the prior month.

Durable goods orders, which make up a little over half of the index, rose +.8% MoM versus a gain of +5.1% in March. The April gain was slightly higher than the originally reported gain of +.6% MoM. Non-durable good demand fell -.2% MoM after rising +2.9% last month. Items in this category include food and gasoline.

Orders for capital goods excluding aircraft and defense slowed to +2.1% MoM from +4.6% in March, but this is better than the original estimate of +1.2% from the Commerce Dept. Orders for this category are used as a proxy for future business investment. Shipments of these goods are used for calculating GDP, and the shipments rose +1% MoM in April following a gain of +1.6% in March.

It appears that businesses were a bit more wary of building up inventories in April. Inventories rose +.5% MoM, for the largest gain since September, and have risen in 13 of the past 14 months. The inventory to sales ratio fell to 1.24 months from 1.25 months.