November 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 $4.9 billion or 1.0 percent to $494.6 billion in November. Shipments of durable goods increased $4.1 billion or 1.8 percent to $238.3 billion (the highest level since the series was first published on a NAICS basis), led by machinery. Meanwhile, nondurable goods shipments increased $0.8 billion or 0.3 percent to $256.3 billion, led by petroleum and coal products.

Wood shipments jumped by 1.2 percent while Paper shipments declined by 0.9 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 20.7 percent decrease in not-seasonally adjusted rail shipments in November (relative to October), but a 1.3 percent rise from a year earlier; on a trend-line basis, total shipments were up 2.1 percent from a year earlier. Excluding coal carloads, year-over-year shipments were up 5.3 percent. Seasonal adjustments reversed the 20.7 percent October-to-November decrease to a 2.1 percent rise. Rail shipments of forest-related products were higher in November than a year earlier, thanks largely to a 8.0 percent rise in the Lumber & Wood Products category. The ATA’s advance index showed a seasonally adjusted 2.7 percent increase in November.

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Inventories increased $0.2 billion to $633.4 billion (also the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.28, down from 1.29 in October.

Inventories of durable goods increased $0.8 billion or 0.2 percent to $384.3 billion, led by transportation equipment. Nondurable goods inventories decreased $0.6 billion or 0.2 percent to $249.1 billion, led by petroleum and coal products. Wood inventories rose by 0.9 percent, and Paper inventories ticked up by 0.1 percent.

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New orders increased $8.8 billion or 1.8 percent to $497.9 billion; excluding transportation, new orders increased 0.6 percent. Durable goods orders increased $8.1 billion or 3.4 percent to $241.6 billion, led by transportation equipment. New orders for nondurable goods increased $0.8 billion or 0.3 percent to $256.3 billion.

As can be seen in the graph above, real (inflation-adjusted) new orders have been essentially flat since early 2011, and have recouped a little more than two-thirds the losses incurred since the beginning of the Great Recession. The trend since early 2013 seems to be on a rising trajectory.

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Unfilled durable-goods orders increased $10.4 billion or 1.0 percent to a new nominal high of $1,058.5 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.42, up from 6.39 in October. Real unfilled orders, a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders have regained just 60 percent of 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.