Factory Orders

by Larry Levin

Another day - another reports is released "worse than expected." Today's macroeconomic disappointment came via the Factory Orders report.

According to the Wall Street Journal we read...

U.S. factory orders dropped more than expected in August, marking the third decline in the last four months.

U.S. manufactured goods orders decreased by 0.5% to $408.94 billion, the Commerce Department said Monday.

Commercial airplanes drove the decline; excluding transportation, all other factory orders rose.

The report had positive data. A barometer of business capital spending increased; non-defense capital goods orders excluding airplanes rose by 5.1%.

Economists surveyed by Dow Jones Newswires had expected overall factory orders would decrease by 0.4% in August. July orders rose 0.5%, revised from a previously reported 0.1% increase.

Factory orders are either durable or non-durable. Durables are designed to last at least three years -- things such as cars. The Commerce report Monday said durables dropped by 1.5%, revised from a previously reported 1.3% decrease. Nondurables rose by 0.3%.

Capital goods orders fell 0.1%. Non-defense capital goods orders rose 0.1%.

Meanwhile, defense-related capital goods dropped by 1.8%. Excluding defense, all other factory orders decreased 0.5%.

Among industries, orders rose for electrical equipment, machinery, and computers. Demand fell for primary metals.

Transportation equipment fell 10.2% as orders for cars and commercial airplanes dropped. Orders for manufactured goods excluding transportation rose 0.9%. This was the first increase in the last five months.

Manufacturers' inventories were up by 0.1% in August, after increasing 0.9% in July.

Shipments declined 0.6%. Unfilled orders, a sign of future demand, were flat.

Like the recent ISM data, this is not a good report. Inventories are rising and everything important seems to be falling.



Previous Day's Trading Room Results:
Trade Date: 10/4/10
E-Mini S&P Trades*
(before fees and commissions):

1) No "Secrets" trades filled today.

2) Algorithm positions (3)

3) “Reading the Tape” positions (3) combined Secret’s, Algo, & “Reading the Tape” total… -4.50

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