December 2012 Manufacturers’ Shipments, Inventories and New Orders

Click image for larger view 

Click image for larger view

According to the U.S. Census Bureau, the value of manufactured-goods shipments increased $1.8 billion or 0.4 percent to $484.9 billion in December.

Shipments of durable goods increased $2.6 billion or 1.1 percent to $230.1 billion, led by primary metals. Nondurable goods shipments decreased $0.8 billion or 0.3 percent to $254.8 billion, led by beverage and tobacco products. Forest products shipments retreated by 0.1 percent (Wood) and 0.3 percent (Paper). 

Click image for larger view

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 3.9 percent decrease in not-seasonally adjusted rail shipments in December (relative to November), and a 4.2 percent drop from a year earlier; on a trend-line basis, total shipments were off 5.1 percent from a year earlier. Excluding coal carloads, year-over-year shipments were up 3.3 percent. Seasonal adjustments reversed the 3.9 percent November-to-December decrease, changing it to a 2.3 percent increase. Rail shipments of forest-related products were higher in December than a year earlier, thanks largely to a 16.3 percent jump in lumber and wood products shipments. The ATA’s advance index showed a 2.8 percent expansion in December. 

Click image for larger view

Inventories increased $0.5 billion or 0.1 percent to $615.5 billion. The inventories-to-shipments ratio was 1.27, unchanged from November.

Inventories of durable goods decreased $0.1 billion to $374.5 billion, led by machinery. Nondurable goods inventories increased $0.6 billion or 0.2 percent to $241.0 billion, led by chemical products. Forest products inventories rose by 0.1 (Wood) and 0.4 (Paper) percent. 

Click image for larger view

New orders for manufactured goods increased $8.6 billion or 1.8 percent to $484.8 billion. Excluding transportation, new orders increased 0.2 percent. New orders for durable goods increased $9.4 billion or 4.3 percent to $230.0 billion, led by transportation equipment, while nondurable goods orders decreased $0.8 billion or 0.3 percent to $254.8 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 appear to be “rolling over” and trending lower in real terms.

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.