September 2012 Manufacturers’ Shipments, Inventories and New Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments increased $4.1 billion (0.9 percent) to $481.3 billion. Durable goods shipments increased $1.7 billion (0.8 percent) to $224.1 billion, led by transportation equipment.

Shipments of nondurable goods increased $2.4 billion (1.0 percent) to $257.2 billion; petroleum and coal products drove the increase. Forest products shipments declined by 1.3 percent (Wood) and 0.4 percent (Paper).
 

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Data from the Association of American Railroads (AAR) and the American Trucking Associations’ (ATA) advance seasonally adjusted For-Hire Truck Tonnage Index help round out the picture on goods shipments. AAR reported a 21.2 percent decrease in not-seasonally adjusted rail shipments in September (relative to August), and a 3.7 percent drop from a year earlier. Excluding coal carloads, year-over-years shipments were up 3.4 percent. Seasonal adjustments mitigated the 21.2 percent August-to-September decrease, shrinking it to a 0.7 percent decrease. Rail shipments of forest-related products were higher in September than a year earlier, thanks exclusively to a 9 percent jump in lumber and wood products shipments. The ATA’s advance index showed a 0.4 percent expansion in September.
 

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Inventories increased $3.7 billion (0.6 percent) to $615.7 billion in September, the highest level since the series was first published on a NAICS basis in 1992. The inventories-to-shipments ratio was 1.28, unchanged from August.

Durable goods inventories increased $0.9 billion (0.3 percent) to $372.9 billion, led by transportation equipment. Inventories nondurable goods increased $2.8 billion (1.2 percent) to $242.8 billion; petroleum and coal products. Wood and Paper inventories were split: Wood rose by 0.9 while Paper fell by 0.8 percent.
 

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New orders for manufactured goods increased $22.0 billion (4.8 percent) to $475.4 billion. Excluding transportation, new orders increased 1.4 percent.

Durable goods orders increased $19.5 billion (9.8 percent) to $218.2 billion, led by transportation equipment. New orders for nondurable goods increased $2.4 billion (1.0 percent) to $257.2 billion. New orders for core capital goods, excluding aircraft, edged up by a seasonally adjusted 0.2 percent in September.

While the Census Bureau’s estimates of new orders for manufactured goods in early 2012 recovered nearly to their previous peak in nominal terms, converting to real, inflation-adjusted terms reveals a quite different story. On that basis, new orders recouped only about half of the loss incurred since December 2007. More worrisome for the future is the observation that new orders are trending lower in both nominal and real terms, thanks in large part to slowing export markets.


The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.