In December, US factory orders increased by 1.8% M/M, less than the expected 2.3% M/M increase. The November figure was downwardly revised from 0.0% M/M to -0.3% M/M. The details show that strength in orders for durable goods (4.3% M/M) was partly offset by a drop in orders for non-durables (-0.3% M/M). The decline in non-durable orders was mainly due to lower orders for petroleum and coal products. Inventories rose by 0.1% M/M, after stabilizing in the previous two months. Shipments increased by 0.4% M/M. The inventory to shipments ratio stayed unchanged at 1.27 in December. Despite the strong increase in durable goods orders, led by defense orders, non-durable orders fell back slightly in December. Most of the report was already known after the release of the durable goods orders. The outcome was therefore slightly disappointing, although the slight increase in inventories might lead to a slight upward revision of the fourth quarter GDP data.