The Factory Orders report serves as an economic indicator that gauges the total volume of new orders received by manufacturers for both durable and non-durable goods. It offers valuable insights into the health of the manufacturing sector, business investment, and anticipated production levels, making it an essential resource for policymakers, traders, and analysts assessing the economy's strength.

What is the Factory Orders report?

Factory orders include all new orders placed with manufacturers, covering consumer goods, capital goods, and defense-related items. The report generally excludes service orders and is categorized into two primary segments:

• Durable Goods: These are products with a lifespan exceeding three years, such as automobiles, machinery, and computers.
• Non-Durable Goods: These are items with a shorter lifespan, including food, clothing, and petroleum products.

The Factory Orders report is closely linked to the Durable Goods Orders report, which is published a week earlier and focuses solely on durable goods orders. The Factory Orders report builds on this information by including non-durable goods orders.

How to read the Factory Orders report

The Factory Orders report is typically presented as a percentage change from the previous month or year. Positive values indicate an increase in new orders, while negative values reflect a decrease. The report may also provide data on shipments, unfilled orders, and inventories, offering additional insights into the manufacturing sector's condition.

When analyzing the report, it is crucial to consider factors such as seasonal fluctuations and the effects of large, one-time orders (e.g., aircraft orders) that can lead to significant data variations. Analysts often focus on the “core” factory orders figure, which excludes volatile items like transportation equipment, to gain a clearer understanding of underlying trends.

Why is the Factory Orders report important?

The Factory Orders report holds significance for several reasons:

• Economic Health: An increase in factory orders indicates rising demand for goods, suggesting a healthy and expanding economy. Conversely, a drop in orders may point to economic weakness or contraction.
• Business Investment: Factory orders data can shed light on business investment trends, as companies typically invest in capital goods when they anticipate future demand growth.
• Future Production: Since factory orders represent the future production pipeline, the report can help forecast upcoming output levels and potential employment changes within the manufacturing sector.

Who publishes the Factory Orders report?

The Factory Orders report is published by the U.S. Census Bureau, a division of the Department of Commerce. The Census Bureau gathers data from the Manufacturers’ Shipments, Inventories, and Orders (M3) survey, which encompasses thousands of manufacturing firms nationwide.

When is the Factory Orders report released?

The Factory Orders report is released monthly, typically within the first week of the month following the reporting period. The data can be accessed on the United States Census Bureau’s website and through various financial news outlets and data providers.