July 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 increased $6.0 billion or 1.2 percent to $507.4 billion in July. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.8 percent June increase. Shipments of durable goods increased $8.3 billion or 3.5 percent to $249.3 billion, led by transportation equipment. Meanwhile, nondurable goods shipments decreased $2.3 billion or 0.9 percent to $258.1 billion, led by petroleum and coal products. Wood and Paper shipments rose by 0.4 and 1.1 percent, respectively. 

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Inventories increased $0.9 billion or 0.1 percent to $653.8 billion (the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.29, down from 1.30 in June.

Inventories of durable goods increased $1.9 billion or 0.5 percent to $401.5 billion, led by transportation equipment. Nondurable goods inventories decreased $1.1 billion or 0.4 percent to $252.3 billion, led by petroleum and coal products. Inventories of Wood expanded by 0.9 percent, while Paper was unchanged. 

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New orders increased $53.1 billion or 10.5 percent to $558.3 billion, the biggest month-over-month rise on record. Excluding transportation, however, new orders decreased 0.8 percent -- to the lowest level since March 2013. Durable goods orders increased $55.4 billion or 22.6 percent to $300.2 billion, led by transportation equipment. New orders for nondurable goods decreased $2.3 billion or 0.9 percent to $258.1 billion.

Prior to July, as can be seen in the graph above, real (inflation-adjusted) new orders had been essentially flat since early 2012 -- recouping roughly 75 percent of the losses incurred since the beginning of the Great Recession. With July’s spike, however, real new orders exceeded the previous (December 2007) peak by 2 percent. 

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Unfilled durable-goods orders increased $58.9 billion or 5.4 percent to $1,158.2 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.64, up from 6.47 in June. Real unfilled orders, a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders finally in July regained (and exceeded by 3 percent) the ground given up during the Great Recession.

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.