U.S. Factory Orders Pull Back In December Amid Drop In Aircraft Demand

(RTTNews) - New orders for U.S. manufactured goods showed a notable pullback in the month of December, according to a report released by the Commerce Department on Tuesday, with the decrease largely due to a steep drop in orders for transportation equipment.

The report said factory orders fell by 1.5 percent in December following a revised 1.5 percent increase in November. Economists had expected orders to drop by about 1.8 percent compared to the 1.8 percent growth originally reported for the previous month.

The drop in factory orders largely reflected a sharp pullback in orders for transportation equipment, which tumbled by 9.7 percent in December after jumping by 8.1 percent in November.

Orders for commercial aircraft and parts plunged by 17.5 percent, while orders for defense aircraft and parts dropped by 13.5 percent. Orders for ships and boats also fell by 8.1 percent.

Excluding the sharp drop in orders for transportation equipment, factory orders actually rose by 0.2 percent in December compared to a 0.3 percent increase in November.

The modest increase in ex-transportation orders in December was partly due to a 1.1 percent increase in orders for non-durable goods, which followed a 0.4 percent increase in the previous month.

Meanwhile, orders for durable goods fell by 4.2 percent in December, reflecting a revision from the 4.3 percent drop reported last week. Durable goods orders increased 2.7 percent in November.

The report also said shipments of manufactured goods edged down by 0.2 percent in December following five consecutive monthly increases.

Inventories of manufactured goods rose by 0.5 percent in December after inching up by 0.1 percent in November.

With inventories rising and shipments falling, the inventories-to-shipments ratio ticked up to 1.29 in December from 1.28 in November.