June 2011 Manufacturers’ Shipments, Inventories and New Orders

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Shipments and inventories both rose at the total manufacturing level during June, but new orders declined. Moreover, the individual industries we track gave lackluster performances, according to the U.S. Census Bureau.
 

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Shipments, up following two consecutive monthly decreases, rose $1.0 billion (0.2 percent) to $444.3 billion. Durable goods shipments increased $1.0 billion (0.5 percent) to $196.1 billion, led by machinery. Shipments of nondurable goods increased slightly to $248.2 billion, the highest level since the series was first published on NAICS basis, led by beverage and tobacco products. Wood shipments declined by 0.7 percent while Paper shipments rose by 0.2 percent.
 

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Data from the Association of American Railroads (AAR) and the Ceridian-UCLA Pulse of Commerce Index (PCI) help round out the picture on goods shipments. AAR reported a 23.2 percent jump in not-seasonally adjusted rail shipments in June (relative to May), but only a 0.9 percent rise relative to a year earlier.

The PCI (which measures diesel consumption of highway trucking) rose by 1.0 percent in June on a seasonally and workday adjusted basis relative to May; however, the index ended 2Q2011 lower than the end of 1Q. “Over the past year the U.S. economy has been in ‘she loves me, she loves me not’ mode,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “Bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends.”

“The PCI has had five positive and seven negative months in the last year, registering a tepid 2.0 percent increase year-over-year,” Leamer continued. “Over the same time period, GDP and payrolls have shown wobbly growth, failing to drive a real recovery or reduction in the unemployment rate. This month’s 1.0 percent increase in the PCI could be the start of a positive trend, but a one month spike does not make a trend, particularly in light of the many false starts experienced over the last year. Until there is enough data to declare a new trend, expect more of the same, somewhat disappointing result -- persistent, wobbly uncertain growth.”
 

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Inventories, up 20 of the last 21 months, increased $1.4 billion (0.2 percent) to $594.4 billion -- to the highest level since the series was first published on a NAICS basis. The inventories-to-shipments ratio was 1.34, unchanged from May.

Inventories of durable goods increased $1.8 billion (0.5 percent) to $357.8 billion, led by transportation equipment. Nondurable goods inventories decreased $0.4 billion (0.2 percent) to $236.5 billion, led by petroleum and coal products. Wood and Paper inventories both fell, by 1.7 and 0.3 percent, respectively.
 

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New orders for manufactured goods, down two of the last three months, decreased $3.8 billion (0.8 percent) to $440.7 billion. Excluding transportation, new orders increased 0.1 percent. Orders for durable goods decreased $3.8 billion (1.9 percent) to $192.4 billion while nondurable goods increased slightly to $248.2 billion.