September 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 $0.7 billion or 0.1 percent to $503.4 billion in September. Shipments of durable goods increased $0.7 billion or 0.3 percent to $246.2 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $0.1 billion or less than 0.1 percent to $257.2 billion, led by chemical products. Wood and Paper shipments fell by 1.0 and 0.1 percent, respectively. 

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Inventories increased $1.5 billion or 0.2 percent to $655.2 billion (the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.30, unchanged from August.

Inventories of durable goods increased $1.7 billion or 0.4 percent to $404.6 billion, led by transportation equipment. Nondurable goods inventories decreased $0.1 billion or slightly to $250.6 billion, led by petroleum and coal products. Inventories of Wood and Paper expanded by 0.1 and 0.4 percent, respectively. 

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New orders decreased $2.8 billion or 0.6 percent to $499.4 billion. Excluding transportation, new orders decreased less than 0.1 percent -- the fourth drop in the last five months. Durable goods orders decreased $2.8 billion or 1.1 percent to $242.2 billion, led by transportation equipment. New orders for nondurable goods increased $0.1 billion or slightly to $257.2 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 transportation-led spike now in the rearview mirror, new orders have dropped back to around 72 percent or their December 2007 high. 

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Unfilled durable-goods orders increased $3.7 billion or 0.3 percent to $1,168.7 billion, led by computers and electronic products. The unfilled orders-to-shipments ratio was 6.71, unchanged from August. Real unfilled orders, which had been a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders in June were back to just 79 percent of their December 2008 peak. Real unfilled orders jumped to 102 percent of the prior peak in July, thanks to the largest-ever batch of aircraft orders, hence, this metric is likely to remain elevated for several years.

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.