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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
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Saturday, May 4, 2013

March 2013 Manufacturers’ Shipments, Inventories and New & Unfilled Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments decreased $5.0 billion or 1.0 percent to $481.8 billion in March.
Shipments of manufactured durable goods increased $1.1 billion or 0.5 percent to $230.4 billion, led by transportation equipment. Nondurable goods shipments decreased $6.1 billion or 2.4 percent to $251.3 billion, led by petroleum and coal products. Forest products shipments retreated by 0.6 (Wood) and 0.3 (Paper) 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 0.8 percent decrease in not-seasonally adjusted rail shipments in April (relative to March), and a 0.4 percent drop from a year earlier; on a trend-line basis, total shipments were off 2.6 percent from a year earlier. Excluding coal carloads, year-over-year shipments were down 0.2 percent. Seasonal adjustments accentuated the 0.8 percent March-to-April decrease, expanding it to a 1.2 percent decrease. Rail shipments of forest-related products were lower in April than a year earlier, thanks largely to a 52.5 percent drop in lumber and wood products shipments. The ATA’s advance index showed a 0.9 percent expansion in March. 

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Inventories increased $0.2 billion to $620.2 billion, the highest level since the series was first published on a NAICS basis. The inventories-to-shipments ratio was 1.29, up from 1.27 in February.
Inventories of durable goods decreased $0.4 billion or 0.1 percent to $376.2 billion, led by primary metals. Nondurable goods inventories increased $0.6 billion or 0.2 percent to $244.0 billion; chemical products drove the decrease. Wood inventories rose by 1.6 percent but paper fell 0.1 percent. 

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New orders for manufactured goods decreased $19.5 billion or 4.0 percent to $467.3 billion. Excluding transportation, however, new orders new orders decreased 2.0 percent.
New orders for durable goods decreased $13.4 billion or 5.8 percent to $216.0 billion, led by transportation equipment; it was the largest drop since August 2012, and well in excess of expectations for a 3.2 percent decline. Nondurable goods orders decreased $6.1 billion or 2.4 percent to $251.3 billion.
“There’s clearly rising near-term caution in capital spending plans by businesses as fiscal tightening hits and global growth slows,” economist Ted Wieseman of Morgan Stanley wrote in a research note.
Converting new orders to real, inflation-adjusted terms reveals an even more-discouraging story. On that basis, new orders have recouped only about one-half of the loss incurred since December 2007 and are still roughly 8 percent below January 2000 levels. 

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Unfilled orders for durable goods decreased $7.1 billion or 0.7 percent to $990.1 billion, led by transportation equipment. Real (i.e., inflation adjusted) unfilled orders, a good litmus test for sector growth, are still in a long-term downward trend.
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.

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