New Factory Orders in May Are Led by Strong Increase in Transportation Sector

The Commerce Department released its full report for factory orders in May. Let’s investigate the details.

The Full Report on Manufacturers’ Shipments, Inventories, and Orders, for May of 2023, puts a spotlight on transportation orders.

Factory Order Highlights

• New orders for manufactured goods in May, up five of the last six months, increased $1.6 billion or 0.3 percent to $578.0 billion. This followed a 0.3 percent April increase.
• Shipments, up following three consecutive monthly decreases, increased $1.6 billion or 0.3 percent to $572.6 billion. This followed a 0.6 percent April decrease.
• Unfilled orders, up five of the last six months, increased $10.5 billion or 0.8 percent to $1,301.9 billion. This followed a 0.8 percent April increase.
• The unfilled orders-to-shipments ratio was 6.65, down from 6.71 in April.
• Inventories, down three of the last four months, decreased $1.7 billion or 0.2 percent to $853.8 billion. This followed a 0.3 percent April increase.
• The inventories-to-shipments ratio was 1.49, down from 1.50 in April.

Excluding transportation, factory orders fell 0.5 percent, Total manufacturing rose 0.3 percent.

Spotlight on Durable Goods

New Orders

• New orders for manufactured durable goods in May, up three consecutive months, increased $5.0 billion or 1.8 percent to $288.4 billion, up from the previously published 1.7 percent increase. This followed a 1.2 percent April increase.
• Transportation equipment, also up three consecutive months, led the increase, $3.8 billion or 3.8 percent to $102.5 billion.
• New orders for manufactured nondurable goods decreased $3.5 billion or 1.2 percent to $289.6 billion.

The phrase “previously published” refers to the durable goods advance estimate from two weeks ago.

Factory Shipments

• New orders for manufactured durable goods in May, up three consecutive months, increased $5.0 billion or 1.8 percent to $288.4 billion, up from the previously published 1.7 percent increase. This followed a 1.2 percent April increase.
• Transportation equipment, also up three consecutive months, led the increase, $3.8 billion or 3.8 percent to $102.5 billion. New orders for manufactured nondurable goods decreased $3.5 billion or 1.2 percent to $289.6 billion.
• Shipments of manufactured nondurable goods, down six of the last seven months, decreased $3.5 billion or 1.2 percent to $289.6 billion. This followed a 0.7 percent April decrease. Petroleum and coal products, also down six of the last seven months, led the decrease, $3.2 billion or 5.0 percent to $61.4 billion.

Durable Goods Unfilled Orders

• Unfilled orders for manufactured durable goods in May, up five of the last six months, increased $10.5 billion or 0.8 percent to $1,301.9 billion, unchanged from the previously published increase. This followed a 0.8 percent April increase.
• Transportation equipment, also up five of the last six months, drove the increase, $10.6 billion or 1.3 percent to $803.8 billion.

Durable Goods Inventories

• Inventories of manufactured durable goods in May, up five of the last six months, increased $1.3 billion or 0.2 percent to $523.0 billion, unchanged from the previously published increase. This followed a 1.0 percent April increase.
• Machinery, up thirty-one consecutive months, led the increase, $0.6 billion or 0.6 percent to $94.5 billion.
• Inventories of manufactured nondurable goods, down six of the last seven months, decreased $3.0 billion or 0.9 percent to $330.8 billion. This followed a 0.6 percent April decrease.
• Petroleum and coal products, also down six of the last seven months, led the decrease, $2.0 billion or 4.4 percent to $44.3 billion.
• By stage of fabrication, May materials and supplies increased 0.3 percent in durable goods and decreased 0.9 percent in nondurable goods.
• Work in process decreased 0.4 percent in durable goods and 1.9 percent in nondurable goods. Finished goods increased 0.9 percent in durable goods and decreased 0.5 percent in nondurable goods.

ISM Manufacturing Dips to 46 Percent, 8th Straight Month of Contraction

According to the Institute for Supply Management, Economic activity in the manufacturing sector contracted in June for the eighth consecutive month following a 28-month period of growth.

For discussion, please see ISM Manufacturing Dips to 46 Percent, 8th Straight Month of Contraction. The diverging reports are stunning.