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US Factory Orders Drop, Core Orders Steady, Dollar Unmoved

Posted by Joseph Trevisani on Feb 4, 2014 10:30:00 AM

New orders to U.S. factories fell in December, but leaving out the volatile transportation sector, placements in the balance of the economy rose modestly for the third month in a row, allaying concerns that manufacturing may have slowed as it moved into the New Year.

Business executives reported that new orders sank 1.5 percent, the mirror of the revised 1.5 percent gain in November and the largest decline since July, according to the Commerce Department in Washington D.C. today. Economists in the Reuters poll had predicted a 1.7 percent increase.

The dollar gained a bit of ground following the release at 10:00 am moving to 1.3498 against the euro from 1.3511  20 minutes after, but by 10:50 am the euro was back at 1.3511. Dollar/yen also improved to 101.54 from 101.40 at the same time.

Factory orders grew 0.8 percent annually in December after seven months of more than 1.0 percent yearly increases. Since the end of the recession in June 2009 these orders have averaged a 6.2 percent annual gain each month. The 20 year monthly average is 3.9 percent.

Orders outside of transportation, sometimes called 'core orders', rose 0.2 percent following a 0.3 percent gain in November.  These orders have averaged a 0.5 percent monthly gain since the end of the recession in June 2009. Over the past 30 years the monthly average is 0.3 percent. The monthly annual expansion in core orders has been 5.09 percent since the end of the recession and 3.78 for the past 30 years.

The transportation sector, which by dollar volume is largely orders for commercial aircraft at the Boeing Company of Chicago, dropped 9.7 percent, also the biggest decrease since July.  These orders rose 8.1 percent in November. Civilian aircraft orders and parts plunged 17.5 percent on the month. Automobile orders fell the most in five months.

Factory activity, as measured by the ISM survey had reached 57.0 in November the best level in more than two and a half years and the fourth quarter was the best since the first three months of 2011.

January's  steep decline in the ISM index to 51.3, after Decembers 56.5 score, reported yesterday and the even sharper  drop in new orders to 51.2 from 64.4, the largest fall in 30 years, while laid to the unusual cold weather in January,  prompted fears that the late year burst of production may have moderated in the first quarter.

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts:  Bloomberg,WWM Alpha Traderfo

ScreenHunter 2123 Feb. 04 12.17

ScreenHunter 2124 Feb. 04 12.18




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