The flow of information about the U.S. economy runs its course through many different people and organizations before it gets to you. Some data releases, such as the ISM's purchasing managers' index or monthly auto sales numbers, succeed in getting timely data out within a few days after the end of the period to which their information relates. Other types of information, such as the release of quarterly GDP data, can take months to compile before one can feel confident that final revisions have taken every piece of data into account.

Revisions and additions to existing data occur all the time. Although sometimes the new releases are clearly identified as revisions or supplements to previously released data, a few releases sound at first as though they involve completely different sets of data. The Census Bureau's release of information on factory orders, for instance, appears to be brand-new information at first glance. However, as this article explains in more detail, much of the information presented in the factory orders report is already known before its monthly release.

The basic concept
The purpose of the report on factory orders is to give information about the level of activity among producers of goods in the U.S. economy. The Census Bureau provides information on the value of goods shipped, new orders for goods received, orders that were previously made but have not yet been filled by manufacturers, and the level of inventory on hand for the given month.

Readers of previous articles will notice that this information is very similar to the data provided in the Census Bureau's report on durable goods. Indeed, the methodology used to gather both sets of data is nearly identical. The factory orders information, however, is more extensive in a couple of important ways. First, the information on factory orders includes makers of nondurable goods, including food products manufacturers like Del Monte (NYSE:DLM) and ConAgra (NYSE:CAG), beverage makers like Cadbury Schweppes (NYSE:CSG), makers of textiles such as Unifi (NYSE:UFI), paper producers like Weyerhaeuser (NYSE:WY), and manufacturers of petroleum and chemical products like Dow Chemical (NYSE:DOW) and Valero (NYSE:VLO). Second, even though general information on durable-goods production is provided in the durable-goods report, the factory-goods report provides a greater level of detail within each industry, as categories are often broken down into several subcategories. For instance, information on transportation equipment manufacturing is divided among automobiles, light trucks, heavy trucks, vehicle bodies and parts, civil and military aircraft, and boats.

Economic implications
As with durable-goods data, the information provided in the factory-goods report gives hints about current and future activity within the manufacturing sector. Today's report, covering activity in August, indicates overall levels of new orders that are virtually unchanged over the past several months. Meanwhile, both unfilled orders and inventory levels have risen steadily, and shipments reversed declines over the past couple of months to rise more than 1% in August.

The increased detail contained within the factory-goods report allows more specific examination of the numbers affecting particular industry subclasses. For instance, orders for photographic equipment, defense-related aircraft and parts, and ships and boats were all dramatically higher in August than they were in July, while orders for electrical equipment, computers, construction and oilfield machinery, navigational equipment, and defense-related communications equipment were sharply lower. In addition, it's apparent from looking at the data over several months that certain categories of manufacturing are extremely volatile. In analyzing a particular industry and the companies within that industry, understanding the way orders rise and fall can help you avoid making mistakes in your investment decisions about those companies. For a company that typically gets the bulk of its orders at unpredictable times throughout the year, for example, it may make little or no sense to react strongly to a particularly positive or negative quarterly report.

One interesting aspect of the data is that while shipments and new and unfilled orders show a great deal of volatility from month to month, inventory numbers are less prone to these dramatic shifts. Of the several dozen industry subclassifications tracked by the report, only two had changes in inventory levels in excess of 5%. In contrast, a significantly higher number of industries had shipments or orders that changed by more than 10% from the previous month. Since the success of a business often relies on proper inventory management that minimizes storage costs while also protecting the company from having to turn down unexpected new orders, data showing well-managed inventory levels is nice to see for investors in those industries.

Because tangible goods are more easily counted and measured than intangible services, reports that focus on industrial production and manufacturing, like the factory orders report, are somewhat more common than reports focusing on services. In evaluating the health of the overall economy, it's important not to lose sight of the fact that services are an integral part of the economy. Although one can easily fall into the trap of basing one's opinion of the economy entirely on data related to production of goods, you should keep in mind that GDP numbers show that the consumption of services within the U.S. economy actually exceeds the consumption of goods. Be careful not to let the way information is presented to you affect your perception of the economy; the information provided by economic data is a tool to allow you to form your own view of current events.

In summary, while the factory-orders report takes much of its information from data previously released in the durable goods report, the Census Bureau provides some helpful supplemental information that is helpful in evaluating particular industries within the manufacturing sector. You can use this information to guide your understanding and evaluation of companies within those industries that you have selected as investment candidates.

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The only factory order that Fool contributor Dan Caplinger has ever made was for a scoop of Cherry Garcia on the Ben & Jerry's factory tour in Vermont. He doesn't hold positions in any of the companies mentioned in this article. The Fool's disclosure policy is definitely a durable good.