August 2011 Manufacturers’ Shipments, Inventories and New Orders

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The value of inventories rose during August for the sectors we track, but shipments and new orders retreated according to the U.S. Census Bureau.
 

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Shipments decreased $0.9 billion (0.2 percent) to $450.2 billion following two consecutive monthly increases (including a 1.2 percent rise in July). Durable goods shipments decreased $0.3 billion (0.1 percent) to $201.1 billion, led by transportation equipment. Shipments of nondurable goods decreased $0.6 billion (0.3 percent) to $249.2 billion, largely because of declining petroleum and coal products. Wood and Paper shipments both fell -- by 1.4 and 0.6 percent, respectively.
 

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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 33.4 percent increase in not-seasonally adjusted rail shipments in August (relative to July), and a 0.3 percent drop compared to a year earlier. Seasonal adjustments “wiped out” the 33.4 percent July-to-August advance, however; thus, the seasonally adjusted Census Bureau value and AAR volume estimates tracked together for once.

“July and August results indicate that the PCI will decline in the third quarter suggesting GDP growth of 0.0 to 1.0 percent,” said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index. “The August number supports the pattern of sluggish economic growth coming out of a recession…. What we’re experiencing is the ‘new normal,’ where the U.S. economy will continue to stumble forward until a new growth engine is identified. Essentially, the economy is in need of an innovation burst.”
 

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Inventories, up 22 of the last 23 months, increased $2.4 billion (0.4 percent) to $601.2 billion. This was at the highest level since the series was first published on a NAICS basis in 1992. The inventories-to-shipments ratio was 1.34, up from 1.33 in July.

Durable goods inventories increased $3.3 billion (0.9 percent) to $365.4 billion, also the highest level since the series was first published on a NAICS basis; the increase was led by transportation equipment. By contrast, inventories of nondurable goods decreased $0.8 billion (0.4 percent) to $235.8 billion, driven lower by petroleum and coal products. Wood and paper inventories both rose, by 0.3 and 0.4 percent, respectively.
 

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New orders for down two of the last three months, decreased $0.8 billion (0.2 percent) to $451.0 billion. This followed a 2.1 percent July increase. Excluding transportation, new orders decreased 0.2 percent. Durable goods orders decreased $0.2 billion (0.1 percent) to $201.9 billion, led by fabricated metal products. Orders for nondurable goods decreased $0.6 billion (0.3 percent) to $249.2 billion.