July 2011 Manufacturers’ Shipments, Inventories and New Orders

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The value of shipments, inventories and new orders rose almost “across the board” during July for the sectors we track, according to the U.S. Census Bureau.
 

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Shipments, up two consecutive months, increased $7.1 billion (1.6 percent), to $453.2 billion. Shipments of durable goods increased $4.7 billion (2.4 percent), to $201.9 billion, led by transportation. Nondurable goods shipments increased $2.5 billion (1.0 percent), to $251.2 billion, with petroleum and coal products in the lead. Wood shipments rose by 2.0 percent while Paper shipments rose by 0.3 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. Although the value of shipments rose, the picture is less clear in volumetric terms. For example, AAR reported a 22.2 percent decline in not-seasonally adjusted rail shipments in July (relative to June), and a 1.0 percent drop relative to a year earlier. Seasonal adjustments turned the 22.2 percent June-to-July decline into a 0.7 percent increase.

The PCI (which measures diesel consumption of highway trucking) dipped by 0.2 percent in July on a seasonally and workday adjusted basis relative to June. “In July, the U.S. economy remained in ‘she loves me, she loves me not’ mode,” said Ed Leamer, chief PCI economist. “July’s result falls in the ‘she loves me not’ category and represents a continuation of the idling economic conditions that have persisted for over a year. Over this time period, bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends.”
 

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Inventories, up 21 of the last 22 months, increased $2.9 billion (0.5 percent), to $598.0 billion -- once again the highest level since the series was first published on a NAICS basis in 1992. The inventories-to-shipments ratio was 1.32, down from 1.33 in June.

Inventories of durable goods increased $3.1 billion (0.9 percent), to $361.4 billion, led -- like shipments – by transportation equipment. Nondurable goods inventories decreased $0.2 billion (0.1 percent), to $236.7 billion; petroleum and coal products drove the decrease. Wood inventories fell by 0.5 percent, but Paper ticked 0.3 percent higher.
 

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New orders, up two of the last three months, increased $10.5 billion (2.4 percent), to $453.2 billion. Excluding transportation, new orders increased 0.9 percent.

New orders for durable goods increased $8.0 billion (4.1 percent), to $201.9 billion; transportation equipment had the largest increase. However, orders for core (i.e., omitting the volatile defense and transportation sectors) capital goods, which give a better read on trends in the private sector, fell by 1.5 percent. Nondurable goods orders increased $2.5 billion (1.0 percent), to $251.2 billion.