October 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 $0.3 billion or 0.1 percent to $489.3 billion in October. Shipments of durable goods increased $0.9 billion or 0.4 percent to $233.7 billion (the highest level since the series was first published on a NAICS basis), led by transportation equipment. Meanwhile, nondurable goods shipments decreased $0.6 billion or 0.2 percent to $255.6 billion, led by petroleum and coal products.

Wood shipments were up 0.2 percent while Paper shipments declined by 0.2 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 24.5 percent increase in not-seasonally adjusted rail shipments in October (relative to September), and a 1.5 percent rise from a year earlier; on a trend-line basis, total shipments were up 2.2 percent from a year earlier. Excluding coal carloads, year-over-year shipments were up 6.0 percent. Seasonal adjustments cut the 24.5 percent September-to-October rise to a 1.0 percent drop. Rail shipments of forest-related products were higher in September than a year earlier, thanks largely to a 10.1 percent rise in primary forest products shipments. The ATA’s advance index showed a seasonally adjusted 2.8 percent decrease in October, the first decrease since July.

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Inventories increased $0.4 billion or 0.1 percent to $633.5 billion (also the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was unchanged at 1.29 in October.

Inventories of durable goods increased $1.0 billion or 0.3 percent to $383.3 billion, again led by transportation equipment. Nondurable goods inventories decreased $0.6 billion or 0.2 percent to $250.1 billion, led by chemical products. Wood inventories rose by 0.6 percent, and Paper inventories declined by 0.6 percent.

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New orders decreased $4.4 billion or 0.9 percent to $486.9 billion; excluding transportation, new orders increased slightly. Durable goods orders decreased $3.8 billion or 1.6 percent to $231.4 billion, led by transportation equipment. New orders for nondurable goods decreased $0.6 billion or 0.2 percent to $255.6 billion. Non-defense capital goods dropped by 3.4 percent, the largest drop since July; also, defense capital goods orders tumbled 15.8 percent (almost completely reversing a 19.1 percent rise in September).

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 $4.1 billion or 0.4 percent to a new nominal high of $1,046.2 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.39, up from 6.38 in September. Real unfilled orders, a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders have regained a little over 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.