Factory Orders

DEFINITION of 'Factory Orders '

An economic indicator that reports the dollar level of new factory orders for both durable and non-durable goods. The factory orders report is released monthly by the Census Bureau of the U.S. Department of Commerce one or two weeks following the durable goods orders report.

The factory orders report is split up into four sections:

  • New orders - indicating whether orders are growing or slowing
  • Unfilled orders - indicating a backlog in production
  • Shipments - indicating current sales
  • Inventories - indicating strength of current and future production

It is also known as the "Manufacturers' Shipments, Inventories and Orders".

BREAKING DOWN 'Factory Orders '

Because the performance of the economy has a large effect on the performance of the investment markets, it is important for investors to monitor indicators such as the Factory Orders to provide insight into growth trends.

As with other indicators that monitor manufacturing and production, equity markets will be positively affected when the factory orders reports an increase in production. Also the factory orders reports gives more detailed information than the durable goods orders report.