The data in the report can be quite volatile month-to-month so one should focus on the underlying trend. A rising trend is a symptom of a favourable economic outlook. The breakdown by sector will indicate whether manufacturing activity is experiencing a broad-based expansion or contraction.
An increasing inventory/shipment ratio suggests that inventories are growing faster than shipments, which could lead to a future decrease in factory production.
Rising unfilled orders reflect backlogs that may support future production, particularly if accompanied by falling inventories. Of course, if the economy has been going through a period of rapid growth, rising unfilled orders and falling inventories may reflect production bottlenecks and future economic difficulties.
