July 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 increased $5.3 billion or 1.1 percent to $487.6 billion in July. Durable goods shipments decreased $0.8 billion or 0.3 percent to $228.8 billion, led by computers and electronic products.

Shipments of nondurable goods increased $6.1 billion or 2.4 percent to $258.8 billion, led by petroleum and coal products. Wood and Paper shipments both advanced, by 0.4 and 0.1 percent, respectively.

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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 21.8 percent increase in not-seasonally adjusted rail shipments in July (relative to June), but a 0.5 percent drop from a year earlier; on a trend-line basis, total shipments were off 0.5 percent from a year earlier. Excluding coal carloads, year-over-year shipments were up 2.1 percent. Seasonal adjustments reduced the 21.8 percent June-to-July increase to just 0.4 percent. Rail shipments of forest-related products were higher in July than a year earlier, thanks largely to a 5.7 percent rise in pulp and paper products shipments. The ATA’s advance index showed a 0.4 percent drop in July.

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Inventories increased $1.5 billion or 0.2 percent to $629.7 billion, the highest level since the series was first published on a NAICS basis in 1992. The inventories-to-shipments ratio was 1.29.

Durable goods inventories increased $1.3 billion or 0.3 percent to $378.9 billion (also the highest level since the series was first published on a NAICS basis), led by transportation equipment. Inventories of nondurable goods increased $0.3 billion or 0.1 percent to $250.8 billion, led by petroleum and coal products.

Wood and Paper inventories rose by, respectively, 0.3 and 0.2 percent.

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New orders decreased $12.0 billion or 2.4 percent to $485.0 billion; excluding transportation, new orders increased 1.2 percent. Durable goods orders decreased $18.1 billion or 7.4 percent to $226.3 billion, led by transportation equipment. New orders for nondurable goods increased $6.1 billion or 2.4 percent to $258.8 billion. As can be seen in the graph above, real (inflation-adjusted) new orders have been essentially flat since early 2011, and have recouped only about half the losses incurred since the beginning of the Great Recession.

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Unfilled durable-goods orders increased $4.0 billion or 0.4 percent to a new nominal high of $1,033.9 billion, led by computers and electronic products. The unfilled orders-to-shipments ratio 6.44, up from 6.38 in June. Real unfilled orders, a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders have regained roughly only half the ground given up since the Great Recession began.

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.