October 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 $1.9 billion (0.4 percent) to $482.3 billion. The unfilled orders-to-shipments ratio was 6.25, up from 6.24 in September.

Shipments of durable goods decreased $0.8 billion (0.4 percent) to $222.7 billion, led by transportation equipment. Nondurable goods shipments increased $2.7 billion (1.1 percent) to $259.7 billion, led by petroleum and coal products. Forest products shipments advanced by 2.7 percent (Wood) and 0.6 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 23.5 percent increase in not-seasonally adjusted rail shipments in October (relative to September), but a 6.1 percent drop from a year earlier. Excluding coal carloads, year-over-year shipments were up 1.9 percent. Seasonal adjustments reversed the 23.5 percent September-to-October increase, changing it to a 2.1 percent decrease. Rail shipments of forest-related products were higher in October than a year earlier, thanks exclusively to a 17.9 percent jump in lumber and wood products shipments. The ATA’s advance index showed a 3.8 percent contraction in October.
 

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Inventories increased $0.5 billion (0.1 percent) to $616.0 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.6 percent September increase. The inventories-to-shipments ratio was 1.28, unchanged from September.

Inventories of durable goods increased $1.7 billion (0.4 percent) to $374.5 billion -- also the highest level since the series was first published on a NAICS basis -- led by transportation equipment. Nondurable goods inventories decreased $1.2 billion (0.5 percent) to $241.5 billion, led by petroleum and coal products. Wood and Paper inventories were split: Wood rose by 0.3 while Paper fell by 0.2 percent.
 

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New orders for manufactured goods in October increased $3.8 billion (0.8 percent) to $477.6 billion. Excluding transportation, new orders increased 1.3 percent. New orders for durable goods increased $1.1 billion (0.5 percent) to $217.9 billion, led by machinery, while nondurable goods orders increased $2.7 billion (1.1 percent) to $259.7 billion.

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 either flat (nominal) or trending lower (real).


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.