November 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 $2.0 billion or 0.4 percent to $483.7 billion. The unfilled orders-to-shipments ratio was 6.14, up from 6.23 in October.

Shipments of durable goods increased $3.5 billion or 1.6 percent to $227.0 billion, led by transportation equipment. Nondurable goods shipments decreased $1.5 billion or 0.6 percent to $256.7 billion, led by petroleum and coal products. Forest products shipments retreated by 1.9 percent (Wood) and 0.3 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 20.5 percent decrease in not-seasonally adjusted rail shipments in November (relative to October), and a 4.0 percent drop from a year earlier; on a trend-line from a year earlier, total shipments were off 5.0 percent. Excluding coal carloads, year-over-year shipments were up 3.3 percent. Seasonal adjustments reversed the 20.5 percent October-to-November decrease, changing it to a 3.3 percent increase. Rail shipments of forest-related products were higher in November than a year earlier, thanks largely to a 10.0 percent jump in lumber and wood products shipments. The ATA’s advance index showed a 3.7 percent expansion in November.

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Inventories decreased slightly to $615.2 billion. The inventories-to-shipments ratio was 1.27, down from 1.28 in October.

Inventories of durable goods increased $0.8 billion or 0.2 percent to $374.8 billion -- the highest level since the series was first published on a NAICS basis -- led by transportation equipment. Nondurable goods inventories decreased $0.8 billion or 0.3 percent to $240.4 billion, led by petroleum and coal products. Wood and Paper inventories were split: Wood rose by 0.4 while Paper fell by 0.3 percent.

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New orders for manufactured goods in November increased $0.2 billion to $477.6 billion. Excluding transportation, new orders increased 0.2 percent. New orders for durable goods increased $1.7 billion or 0.8 percent to $220.9 billion, led by machinery, while nondurable goods orders decreased $1.5 billion or 0.6 percent to $256.7 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.