Feb. Factory Orders Preview
Feb. Factory Orders are expected to fall 0.8% after a 2.2% decline in Jan. and a 2% increase in Dec. Factory Shipments in Feb. are expected to fall 1.5% vs. a 1.3% increase in Jan. Factory Inventories are expected at 0.4% after coming in at 1.3% in Jan. This would push the Inventory-To-Sales ratio to 1.26% in Feb. from 1.24% in Jan. Factory Orders were up 7.7% annually in Jan. Year-on-year Shipments were up 7.3% and Factory Inventories were up 5.1%.
The Feb. Durable Goods report showed a 1.7% decline in orders and a 2.8% decline in shipments. Though this is a slight improvement from the prior month it will have a negative impact on Feb. Factory Orders.
Non-Durable Goods Orders and Shipments are not expected to have a significant impact on the overall data. Any positive additions from the Non-Durable sector are likely to be dragged down by declines in the Durable Goods sector. Non-Durable Goods Orders were up 0.3% in Jan, while Non-Durable Shipments grew 2.3%.
Inventories tend to lag sales by about half a year which may explain recent strength in Factory Inventories despite the anticipated slowdown. Continued declines in Factory Orders will lead to reductions in inventories, though this may take several months to occur.