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New orders for U.S. manufactured goods rose 0.3%

The value of new orders for U.S. manufactured goods rose 0.3% in September at a monthly rate, to $551 billion, the Census Bureau reported.

This followed a 0.2% increase in August.

A new order is the communication of an intention to purchase for immediate or future delivery.

Only orders supported by legally binding documents (such as signed contracts, letters of intent, or award letters) should be included.

The data reported should include all new orders received during the month minus cancellations.

On the other hand, shipments increased 0.2% to $550.3 billion. This followed a 0.7% increase in August.

Manufacturers’ shipments measure the dollar value of products sold by manufacturing establishments and are based on net sales values, f.o.b. (free on board) from the plant, after excluding discounts and allowances. Freight and excise taxes are excluded.

Where an industry’s products are routinely delivered to distributors or consumers by the manufacturing establishment (as in certain food industries -liquid milk, bakery, soft drinks), the value is based on the delivered price and not the f.o.b. plant price.

Multi-sector companies report information on the value of each industry category as if it were a separate economic unit. Thus, products transferred from one plant to another are valued at their full economic value.

Manufactured goods

Orders on hand increased 0.5%, to $1,137.8 million. This followed a 0.5% increase in August.

Generally, unfilled orders at the end of an accounting period are equal to unfilled orders at the beginning of the period, plus new orders net of cancellations received during the period, less net sales.

This includes orders that have not yet passed through the sales account and financed orders (or parts of orders) for which the value of work performed has not been reported as sales.

Finally, inventories increased 0.2% to $801.6 billion. This followed a 0.1% decrease in August.

Total inventories represent the value of inventories at month-end, regardless of the stage of manufacture (whether in the form of purchased materials and supplies, work in progress or finished goods).

These inventories are valued at cost using any valuation method other than LIFO. Inventories associated with the company’s non-manufacturing activities are excluded.

The Manufacturers’ Shipments, Inventories, and Orders (M3) survey provides broad-based monthly statistical data on economic conditions in the domestic manufacturing sector. The survey measures current manufacturing activity and provides an indication of future business trends.

 

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