August 2010 Manufacturers’ Shipments, Inventories and New Orders: Digging below the Headline for a Little Encouragement

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Shipments, inventories and new orders at the total manufacturing level posted mixed results in August, according to the U.S. Census Bureau.
 

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Shipments, down three of the last four months, decreased $2.5 billion (0.6 percent) to $415.1 billion. This followed a 1.2 percent July increase. The decline was led by a $3.1 billion (5.8 percent) retreat in transportation equipment. Greater shipments of manufactured nondurable goods -- especially chemical products (up $0.4 billion or 0.7 percent) -- offset some of the fall-off in shipments.

Shipments from solid wood manufacturers declined by 4.3 percent while paper manufacturers saw a 0.1 percent increase.
 

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Interestingly, data from the Association of American Railroads indicate a general increase in the amount of rail traffic during August – especially shipments of lumber and wood products. The 1 percent decrease in the Ceridian-UCLA Pulse of Commerce Index (which measures diesel consumption of over-the-road trucking) for August was more consistent with the Census Bureau’s shipment values.
 

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Inventories inched higher ($0.7 billion, or 0.1 percent, to $526.4 billion) again in August. Transportation equipment had the largest increase, at $0.6 billion (0.8 percent), while petroleum and coal products led the decliners (down $1.2 billion or 2.9 percent).

Solid wood inventories fell by 0.8 percent while paper remained unchanged.
 

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New orders constitute the forward-looking portion of the Census Bureau’s report, and give an indication of what may be in store for the manufacturing sector. As such, the report’s headline numbers did not provide much encouragement, because new orders for manufactured goods decreased $2.2 billion (0.5 percent) to $408.9 billion. Transportation equipment -- especially aircraft -- had the largest decrease among durable goods ($5.3 billion or 10.2 percent). Excluding aircraft, however, durable goods orders increased by a much healthier-sounding 0.9 percent; this result indicates at least some companies are replacing outdated equipment. New orders for nondurable goods increased $0.7 billion or 0.3 percent to $217.1 billion.