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According
to the U.S.
Census Bureau, the value of manufactured-goods shipments decreased $5.3
billion or 1.1% to $488.2 billion in December. Shipments of durable
goods increased $3.2 billion or 1.3% to $247.4 billion, led by transportation
equipment. Meanwhile, nondurable goods shipments decreased $8.5 billion or 3.4% to $240.8 billion, led by petroleum and coal products. Wood and Paper shipments
rose by, respectively, 0.9 and 0.8%.
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Inventories
decreased $2.0 billion or 0.3% to $653.9 billion. The
inventories-to-shipments ratio was 1.34, up from 1.33 in November.
Inventories
of durable goods increased $1.8 billion or 0.4% to $410.5 billion, led
by transportation equipment. Nondurable goods inventories decreased $3.8
billion or 1.5% to $243.4 billion, led by petroleum and coal products. Inventories
of Wood and Paper expanded by, respectively, 0.2 and 0.3%.
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New
orders decreased $16.4 billion or 3.4% to $471.5 billion. Excluding
transportation, new orders decreased 2.3% -- the seventh drop in the
last eight months. Durable goods orders decreased $8.0 billion or 3.3%
to $230.6 billion, led by transportation equipment. New orders for nondurable
goods decreased $8.5 billion or 3.4% to $240.8 billion.
Prior
to July 2014, as can be seen in the graph above, real (inflation-adjusted) new
orders had been essentially flat since early 2012, recouping roughly 75% 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 55% of their December 2007 high.
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Unfilled
durable-goods orders decreased $9.4 billion or 0.8% to $1,166.9 billion,
led by transportation equipment. The unfilled orders-to-shipments ratio was 6.69,
down from 6.81 in November. 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 2014 were back to just 79% of their December 2008 peak.
Real unfilled orders jumped to 102% 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.
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