This is a decent report and shows some momentum in factories but it's overshadowed by a jump in the JOLTS number released at the same time. US yields are moving higher in the aftermath of both and USD/JPY is at the highs of the day at 158.37.
For background, the US Census Bureau’s factory orders report, formally the full report on Manufacturers’ Shipments, Inventories and Orders, is released monthly at 10 am ET, about five weeks after the reference month ends. It arrives roughly a week after the advance durable goods report and expands on it by adding nondurable goods.
The headline figure is the monthly change in total new orders for manufactured goods. Nondurables include petroleum and coal products, chemicals, food, paper and plastics. For most nondurable industries, orders are essentially equal to shipments because products aren’t built to order with a backlog. That means swings in oil and commodity prices feed straight into the nondurables figures, since refined petroleum products make up a large share. Markets also look at factory orders excluding transportation, which strips out the volatile aircraft and motor vehicle categories.
The report includes revised durable goods data, which sometimes differ meaningfully from the advance estimates. Economists pay close attention to revisions to core capital goods orders and shipments, nondefense capital goods excluding aircraft. Shipments of those goods feed into the equipment investment component of GDP, and the revised figures can shift growth estimates.
The release also covers manufacturers’ inventories, unfilled orders and the inventory-to-shipments ratio. These offer a read on whether factories are building or drawing down stock and how much work they have in the pipeline.
Because most of the durables data are already known and nondurables largely track commodity prices, factory orders rarely move markets. Its value is in completing the manufacturing picture and providing the revisions that feed into GDP tracking.
This article was written by Adam Button at investinglive.com.
Source: Investing Live - News
