Factory orders in July rose +3.7% MoM (consensus +3.3%), and June's figure was revised higher to +1% MoM from +.6%. Orders excluding transportation rebounded strongly from the decline of -.4% MoM in June to increase by +2.4% MoM in July, indicating the demand was broad-based. Aircraft growth slowed to +13% MoM from +37% MoM growth in June. Automobile orders jumped 11% MoM, the largest increase in 4.5 years, and a surprising increase based on anemic auto sales over the past few months, though GM says pick-up demand has risen in August.
Export demand was a key driver of sales, and it is not clear how the recent credit crunch will impact demand in the future. Orders for durable goods make up over half of total factory demand, and they surged higher in July. Durable goods orders more than tripled from the prior month, to +6% MoM growth. Computer and electronic demand rebounded, growing 7% after falling almost 5% last month. Demand for machinery rose 5.6% MoM. Non-durable goods demand rose 1.3% MoM, a definite improvement over the +.2% gain in June. Rising oil prices pushed up the value of orders for petroleum products.
It appears that future business investment started the third quarter on a stronger note. July orders for capital goods excluding aircraft and military equipment rose +1.7% MoM after declining the prior month. Shipments of capital goods excluding defense and aircraft ( used to calculate GDP growth) rose +.4% MoM after falling -.8% MoM the prior month. Unfilled orders rose 1.4% MoM.
Factory inventories rose for the second month in a row, but with sales rising, the inventory-to-sales ratio actually fell to 1.21 months of supply, the lowest level in a year.
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Chicago PMI was also reported stronger than expected this morning with new orders and order backlogs rising. The index rose to 53.8 from 53.4 in July.
The Milwaukee NAPM also was higher, rising to 63 from 57 in July.
Friday, August 31, 2007
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