|Month over Month||0.8%||0.6% to 1.1%||1.0%||1.1%||1.3%|
Factory orders rose 1.0 percent in October split between a 1.3 percent rise for durable goods (unrevised from last week's advance data for this component) and a 0.7 percent gain for nondurables which is the new information in today's report. October was a good month for the factory sector highlighted by another strong gain for core capital goods (nondefense ex-aircraft) which rose 0.8 percent. Construction materials were another positive, also rising 0.8 percent. A negative, however, were total unfilled orders which extended their long run of contraction, falling 0.2 percent in October; lack of unfilled orders helps explain the relatively moderate recovery underway in manufacturing employment.
Market Consensus Before Announcement
Factory orders are expected to rise 0.8 percent in October. Advance data on the durables side of October's report rose 1.3 percent.
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.