Today the Commerce Department's Bureau of the Census released its January report on Manufacturers' Shipments, Inventories, and Orders (a.k.a. Factory Orders).

New orders for manufactured goods in January increased $1.6 billion or 0.5 percent to $311.1 billion. This follows an increase of 1.7 percent in December and declines of 0.1 percent and 0.6 percent in November and October, respectively. When the effects of the highly-variable transport sector were removed, the January increase in orders jumped to 1.2 percent and the December figure only rose 0.2 percent.

But, one month's data doesn't define a trend. Taking a longer-range perspective, we find that the year-over-year growth in orders was just 3.73 percent. This indicator has trended downward since peaking in 1994 at approximately 13 percent.

Shipments in January were down for the first month since October, decreasing $2.7 billion or 0.9 percent. This followed a 0.7 percent increase in December.

Unfilled orders were up for the fifth consecutive month increasing by 1.7 percent. This was the largest monthly increase in unfilled orders since December 1989. The unfilled orders-to-shipments ratio was 2.85, up from 2.75 in December.

Manufacturers continue to have trouble working off stocks of unsold goods. Inventories increased by 0.7 percent in January, the sixteenth consecutive monthly increase and the twenty-third in the last twenty-five months. The inventories-to-shipments ratio was 1.39, up from 1.37 in December.

Elsewhere, Mitsubishi Bank/Schroder Wertheim reported today that sales at the retail stores covered by their survey decreased by 1.0 percent in the week ending March 2. This followed on the heels of a 1.1 percent decrease in the preceding week.

In other news, Uncle Al, the bondtrader's pal was at it again today. Speaking at a bankers conference at Las Vegas, Fed chairman Greenspan opined that efficiencies and productivity improvements due to the increasing use of computers by businesses was generating economic growth that was not showing up in government statistics. Bond traders translated "...we may be underestimating the growth of our GDP...", to mean "We may not be lowering interest rates again anytime soon.", so that by the time the stock markets had closed today the 30-year T-bond was down 18/32.

On the subject of inflation, Greenspan suggested that recent experience with the behavior of producer prices "... provides some tentative evidence that basic, ongoing changes in the structure of the economy may be helping to hold down business costs and price pressures ...". I read this to mean that Greenspan probably feels okay about the inflation situation so, at this time, fear of rising prices would not be a factor in deciding whether to provide additional stimulus to the economy by way of lower interest rates.

Byline: Lafferty (MF Merlin)