January 2014 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 $1.7 billion or 0.3 percent to $490.7 billion in January. Shipments of durable goods decreased $0.7 billion or 0.3 percent to $232.6 billion, led by machinery. Meanwhile, nondurable goods shipments decreased $0.9 billion or 0.4 percent to $258.1 billion, led by chemical products. Wood shipments rose by 0.7 percent while Paper shipments increased by 0.4 percent. 

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Inventories increased $1.2 billion or 0.2 percent to $637.7 billion (the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.30, up from 1.29 in December.

Inventories of durable goods increased $1.1 billion or 0.3 percent to $389.1 billion, led by transportation equipment. Nondurable goods inventories increased slightly to $248.6 billion, led by chemical products. Wood inventories rose by 0.7 percent, and Paper by 0.3 percent. 

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New orders decreased $3.3 billion or 0.7 percent to $483.0 billion; excluding transportation, new orders increased 0.2 percent. Durable goods orders decreased $2.3 billion or 1.0 percent to $225.0 billion, led by transportation equipment. New orders for nondurable goods decreased $0.9 billion or 0.4 percent to $258.1 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 very modest upward trend since mid-2012 is still in place, however. 

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Unfilled durable-goods orders increased $0.3 billion to a new nominal high of $1,059.9 billion, led by machinery. The unfilled orders-to-shipments ratio was 6.50, down from 6.52 in December. 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.