December 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 $1.2 billion or 0.2 percent to $492.7 billion in December. Shipments of durable goods decreased $4.0 billion or 1.7 percent to $233.5 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $2.8 billion or 1.1 percent to $259.2 billion, led by petroleum and coal products. Wood shipments fell by 1.7 percent while Paper shipments rose by 0.4 percent.

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Inventories increased $2.9 billion or 0.5 percent to $636.6 billion (the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.29, up from 1.28 in November.

Inventories of durable goods increased $3.2 billion or 0.8 percent to $387.9 billion, led by transportation equipment. Nondurable goods inventories decreased $0.3 billion or 0.1 percent to $248.7 billion, led by food products. Wood inventories rose by 1.2 percent; Paper ticked up by 0.1 percent.

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New orders decreased $7.2 billion or 1.5 percent to $489.2 billion; excluding transportation, new orders increased 0.2 percent. Durable goods orders decreased $10.0 billion or 4.2 percent to $230.0 billion, led by transportation equipment. New orders for nondurable goods increased $2.8 billion or 1.1 percent to $259.2 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 very modest rising trajectory.

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Unfilled durable-goods orders increased $3.9 billion or 0.4 percent to a new nominal high of $1,061.7 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.53, up from 6.44 in November. 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.