January 2013 Manufacturers’ Shipments, Inventories and New Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments decreased $1.0 billion or 0.2 percent to $481.8 billion in January.

Shipments of durable goods decreased $2.7 billion or 1.2 percent to $226.2 billion, led by transportation equipment. Nondurable goods shipments increased $1.6 billion or 0.6 percent to $255.6 billion, led by petroleum and coal products. Wood products shipments advanced by 3.7 percent while Paper retreated by 0.6 percent. 

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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 23.2 percent increase in not-seasonally adjusted rail shipments in January (relative to December), and a 6.3 percent drop from a year earlier; on a trend-line basis, total shipments were off 5.3 percent from a year earlier. Excluding coal carloads, year-over-year shipments were up 0.2 percent. Seasonal adjustments reversed the 23.2 percent December-to-January increase, changing it to a 3.9 percent decrease. Rail shipments of forest-related products were higher in January than a year earlier, thanks largely to a 14.6 percent jump in lumber and wood products shipments. The ATA’s advance index showed a 2.9 percent expansion in January, a “best-ever” for that month of the year. 

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Inventories increased $3.2 billion or 0.5 percent to $618.4 billion. The inventories-to-shipments ratio was 1.28, up from 1.27 in December.

Inventories of durable goods increased $0.9 billion or 0.2 percent to $375.0 billion, led by transportation equipment. Nondurable goods inventories increased $2.3 billion or 1.0 percent to $243.4 billion, led by chemical products. Forest products inventories rose by 1.6 (Wood) and 0.2 (Paper) percent. 

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New orders for manufactured goods decreased $9.6 billion or 2.0 percent to $472.9 billion -- the biggest drop in five months; moreover, total new orders were only 0.3 percent higher than a year earlier. Excluding transportation, new orders increased 1.3 percent in January (relative to December). New orders for durable goods decreased $11.2 billion or 4.9 percent to $217.3 billion, led by transportation equipment, while nondurable goods orders increased $1.6 billion or 0.6 percent to $255.6 billion.

While the Census Bureau’s December 2012 estimate of new orders for manufactured goods nearly bested its previous (June 2008) 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.