US: Factory Orders

U.S. factory orders rose by 0.6 percent in February, following a revised 1.8 percent jump (previously +1.7 percent) in January, and a 0.6 percent decline in December. This exceeds expectations in the Econoday survey of forecasters for a 0.5 percent increase.

New orders excluding transportation rose by just 0.4 percent, however, following a 0.3 percent rise in January. They were up 0.5 percent excluding defense, slowing down from a 1.9 percent spike in January.

Manufacturers' shipments were up 0.7 percent in February following a 0.5 percent increase in January but saw just a 0.4 percent increase excluding transportation compared to a 0.3 percent uptick in January.

After a big 1.7 percent jump in January, orders are seen up 0.5 percent in February.

Factory orders represent the dollar level of new orders for both durable and nondurable goods. This report gives more complete information than the advance durable goods report which is released one or two weeks earlier in the month.

Investors want to keep their fingers on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth which is less likely to cause inflationary pressures. By tracking economic data like factory orders, investors will know what the economic backdrop is for these markets and their portfolios. The orders data show how busy factories will be in coming months as manufacturers work to fill those orders. This report provides insight to the demand for not only hard goods such as refrigerators and cars, but nondurables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production. All in all, this report tells investors what to expect from the manufacturing sector, a major component of the economy and therefore a major influence on their investments.